[LINK] Fibre Networking - Transact sells to iiNet

Richard Chirgwin rchirgwin at ozemail.com.au
Wed Nov 23 16:12:03 AEDT 2011

On 23/11/11 2:13 PM, kim holburn wrote:
> Seems to me that this - ownership of the last mile by a company was
> what NBN was created to avoid.  This is a strange thing.  Transact is
> not FTTH/FTTP, it is FTTN nor does it have full coverage even in the
> suburbs it covers.
In Canberra, TransACT is more like the NBN than you think. The company 
lists 11 third-party providers offering broadband services.

TransACT has some FTTP (eight or ten estates) as well as the FTTN in 
Canberra. It also has HFC it bought with Neighborhood Cable, in Ballarat 
etc. And it offers DSL services out of Telstra exchanges.
> Does this mean NBN is giving up FTTP for transact suburbs or does this
> mean that TransACT has given up and has realised that it can't sell to
> NBN because NBN doesn't want it?
It doesn't necessarily mean either. The NBN has a long rollout; what 
happens in 2011 doesn't necessarily change the world of 2018. It doesn't 
even mean that the acquisition was a dog for iiNet; the buyer would 
normally expect the investment to pay for itself sooner than that. If 
iiNet gets its money back out of customers by 2016, it doesn't have to 
care what happens to the fibre after that.

But having the NBN connect residential and small business customers 
doesn't therefore mean all of TransACT's fibre is now worthless: it's 
also got fibre to high-value premises like data centres (two of its own 
and several others), some CSIRO facilities IIRC, and so on.

The fibre portion of the old Neighborhood Cable network is another 
matter; I don't know whether NC did anything with fibre except pull it 
out for the HFC network.

What iiNet wants is the customers. We won't see it crying into its beer 
over the network. The government customers, in particular, give iiNet a 
pretty cheap entry into a market that it hasn't addressed in the past.

> Kim
> On Wed, Nov 23, 2011 at 11:26 AM, Tom Koltai<tomk at unwired.com.au>  wrote:
>> 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.
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