[LINK] Fibre Networking - Transact sells to iiNet

[Tom Koltai]

http://www.smh.com.au/it-pro/business-it/investors-lose-in-transacts-sal
e-20111121-1nqwx.html#ixzz1eT3vWCSx

Quote/
TVG Capital, Motor Trades Association of Australian Super and ACTEW are
among investors that will get $60 million from the sale of Canberra
broadband provider TransACT to iiNet - an asset that cost them $280
million to build over 10 years.

Perth-based iiNet expects to acquire 4500 kilometres of broadband
network and 40,000 customers through the deal, including 50 lucrative
contracts with government departments.

Chief financial officer David Buckingham said iiNet was ''paying $60
million for the business including the network and that is the cost to
us of this business''.

Advertisement: Story continues belowiiNet expects the deal to be
earnings accretive and would fund the acquisition through existing cash
and debt facilities, leaving it with a gearing ratio of 70 per cent.

Chief executive of iiNet, Michael Malone, said TransACT's infrastructure
was unlikely to be over-built by NBN Co's fibre optic network.

''Over-building TransACT, particularly in Canberra, would be
commercially and politically odd,'' he said.

TransACT has been on the market since June 30 and the deal with iiNet
should be done by November 30. It has eight shareholders who contributed
$255 million in equity. TransACT was carrying a loss of $200 million at
June 30 according to company documents.

TransACT chief executive Ivan Slavich said 43 per cent shareholder, TVG,
had to sell its stake to crystallise its investment. TVG invested $US29
million in 2000, its website said. ''[TVG] established super funds which
last for 10 years. At the end of the 10 years they need to close those
funds and TransACT was one of the last investments,'' he said.

Canberra's electricity provider ACTEW has invested $60.8 million in the
company since 2000, giving it an 18 per cent stake valued at $4.7
million. It expects to make a ''modest profit . above the $4.7 million
carrying value,'' a spokeswoman said.

A spokesman for MTAAS would not comment for commercial reasons.
/Quote

It seems that Fibre infrastructure returns would depend on first
minimising anti-competitive interference.