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2012 Australia - Telco Company Profiles - 2nd Tier

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Last updated: 24 Oct 2012 Update History

Report Status: Archived

Report Pages: 135

Analyst: Paul Budde

Publication Overview

In this report we provide an overview of the 2nd tier companies, including analysis by BuddeComm, with facts and figures on the company operations in tabular and easy-to-read chart formats.

Companies covered in this report are:

AAPT, Amcom Telecommunications Limited, iiNet Limited (Including Internode, TransAct), Macquarie Telecom, M2 Telecommunications (Including Primus Communications), Nextgen Networks Pty Limited, TPG Telecom Limited (Including PIPE Networks).

Information on Telstra, Optus and Vodafone are covered in a separate report Australia - Telco Company Profiles - Telstra, Optus and Vodafone

Researchers:- Paul Budde, Stephen McNamara
Current publication date:- October 2012 (18th Edition)

Executive Summary

Increased competition expected from OTTs

The second-tier market is making gains in broadband and they are stepping up IPTV and other OTT activities which will then be bundled into their other product offerings. Although the bundled market often sees overall revenues fall but it generally maintains a higher ARPU. Also in 2013 further consolidation is expected.

While the fixed-voice market revenue declines in the second-tier market so too are mobile and broadband revenues. Falling revenue reflects increased bundle value as well as consumers moving away from fixed-voice services, it is also be a symptom of increased reliance on OTT platforms for both voice and messaging – and in particular the latter. Nevertheless, overall revenues in second-tier mobile services and data services (including internet access) continue to show growth. This is based on increased use of mobile broadband and people moving to higher-speed broadband packages.

It has become clear that OTT is ‘the new normal’ for the telecoms industry - with the emerging all-IP networks; telecoms services are basically moving to new business models. These services are seen as a threat by the traditional telcos and the companies offering them are perceived to be getting a free lunch over their networks. This report explores and analyses opportunities and the threats of the various trends and developments in the telecommunications market to the sector and the industry transformation BuddeComm believes is required for the future.

In this report we provide an overview of some of the larger 2nd-tier market players with key revenue figures for the market with brief financial and operational overview on the companies with analysis and data provided in several formats including easy-to-read charts and tables. Developments in this market have been dominated by industry consolidation, a process that is set to continue over coming years. Moving towards a structurally separated regulatory environment with a NBN at the horizon, size does matter. The other important development has been Telstra’s aggressive activities to increase their market shares and this has been hurting the 2nd tier market. This is clearly reflected in this year data, total revenues are under $3 billion, well under 10% of the total telecoms market in Australia. This again shows the dominance of in particular Telstra. This year we have left Vodafone out of the 2nd tier market segment, but for comparison reasons there are still references to them.

The NBN, and in particular the structural separation between infrastructure and services, is going to change the telecoms industry beyond recognition. Gone will be the days of regulatory gaming. A completely new industry structure will require collaboration and cooperation, rather than the destructive adversarial environment of the past.

There are still some serious issues that need to be resolved. Are the current government policies conducive to achieving the affordable outcome that is necessary? The first signs are promising. The other question is whether the design of the NBN will lead to true wholesale competition; or will it restrict this to a handful of players who can afford to build their presence in the 121 points of interconnect?

The ACCC has already indicated that this will be one of the main areas it will be monitoring. The unique construction that offers backhaul competition could indeed be the facilitator in obtaining the competitive outcome needed to ensure that a dynamic system is developed which will lead to innovation.

Industry collaboration will also be needed to limit the necessity for more regulation. In a dynamic environment time is money and there is no longer room for year-long regulatory processes. Trust needs to be built up to facilitate much speedier dispute resolution, preferably preventing these disputes from arising in the first place. Some early indications are that NBN Co is willing to sit down and make changes where it makes sense to create a better wholesale and retail environment for all involved.

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