Mergers and Acquisitions

Big news of the week – assuming the launch of an NBN satellite doesn’t get your pulse racing – are the new consolidations and partnerships in the Australian telco sector.

Firstly, M2 and Vocus have announced plans to merge, pending approval from the regulator. M2, lest you don’t know, is the parent company of providers Commander, Dodo and Primus. Vocus is a fairly new player in the corporate ICT market, whose meteoric rise no doubt owes to their stated commitmentto ‘make a difference by doing things differently’.

Vocus and M2 are something of a natural fit, since there are few areas of overlap. The new Vocus / M2 behemoth will be the ‘fourth largest vertically integrated telecommunications company in Australia’, according to Vocus chairman David Spence. They will offer: "retail internet; retail electricity and gas; corporate internet and IP voice; wholesale internet and IP voice; data centre and cloud services; international and domestic bandwidth; and dark fibre."

Secondly, TPG has signed a deal with Vodafone whereby the former will resell the latter’s mobile services as an MVNO. Meanwhile, Vodafone will be able to utilise TPG fibre for its mobile towers. It is reported that these two deals are worth $1 billion dollars.

I have to ask: have you ever stopped to think what that means? Just what is a billion dollar deal? Does it mean that one party is paying the other a billion dollars? Are they each paying the other half a billion, thus bringing the net total to zero? Are they collectively saving a billion dollars? Will the deal increase their collected profits by a billion bucks? They kind of throw these numbers out there – like the fact that Australia has a 1.5 trillion dollar economy – yet never explain what it means. Anyway, well done: a $1 billion deal.

The first part of the deal is arguably more interesting, and more likely impact actual customers. TPG currently operates its MVNO using the Optus network, with a respectable 300,000 mobile customers. These customers will now be migrated across to the Vodafone 4G network. TPG insists that this won’t be a problem due to Vodafone’s ‘reliability’, which might come as news to existing Vodafone customers, not to mention Optus. TPG CEO David Teoh reckons those customers will enjoy ‘substantially faster data speeds’.

In any case, each customer will first be invited to trial the Vodafone network ‘without obligation’, though I’m not sure what happens if they decide it isn’t up to scratch. Perhaps they’ll be ‘invited’ to take their business elsewhere.

But back to that terribly exciting NBN satellite launch. Did you know that it might explode?! At least, that's according to the Sydney Morning Herald's shameless clickbait headline:  "Sky Muster: NBN's fancy satellite could explode, is as big as an elephant and was initially unloved"

Reading through the article reveals that this satellite launch has no greater chance of exploding than any other satellite launch. Indeed, there's rather less chance given that the launch provider was specifically chosen for its sterling record of success. Furthermore, if it did explode there would be no cost to tax payers due to the insurance deal. Really, SMH, you need to be better than this.