Australia - Telco Company Profiles - 2nd Tier

Publication Overview

This report provides an overview of the main 2nd tier telcos in Australia, including key financial and operational data as well an analysis on company strategies in response to market developments and an intensifying competitive environment.

The companies profiled in this report are  Foxtel, Vocus - M2,  TPG Telecom (iiNet), Macquarie Telecom.

There is a separate report that covers: Australia - Telco Company Profiles - Telstra, Optus and Vodafone

Researchers:- Phil Harpur
Current publication date:- November 2017 (23rd Edition)

Executive Summary

Vocus and TPG continue to challenge Telstra and Optus

TPG Telecom Limited acquired local ISP iiNet. TPG is now Australia's second-biggest provider of fixed-line broadband in Australia with over 1.7 million customers. Services including voice, internet and data solutions are provided to a customer base ranging from the consumer market through to small and medium enterprises, corporate and government sectors. The company also owns a cloud-hosting company and the PIPE network infrastructure that includes the third largest domestic dark-fibre operation and the submarine cable network to Guam, Asia and the United States.

The company is delivering an extensive Fibre-to-the-Basement (FttB) service to apartment buildings in capital cities, offering broadband at 100Mb/s at a price which undercuts existing offers from rival ISPs. TPG has also secured spectrum in the 2.5GHz band to bolster its wireless broadband capabilities, and has committed to investing in additional capacity on the subsea cable linking to New Zealand and the US West Coast.

The company has the largest data network and voice network after Telstra, the largest fully converged voice, video and data IP-based access network in regional Australia, and the largest voice-enabled IP network. TPG created a new retail arm to sell its wholesale fibre-to-the-basement product to residential customers.

In 2017 TPG made a bold move to become the fourth mobile operator in Australia. Initial sites are targeted for mid 2018.

Vocus is an Australian based telecommunications provider with offices in Australia and New Zealand. Its services include co-location, internet, voice, fibre and ethernet services. Vocus merged with M2 Communications and acquired Amcom. Vocus also acquired Nextgen Networks and its 17,000km fibre network linking major cities and regional centres.

The Vocus / Merger with M2 creates Australia's fourth-largest telecommunications company and the third-largest in New Zealand. Vocus’ acquisition of Nextgen Networks will seriously lift its position as an infrastructure based telco. The acquisition is the next and perhaps final part of the company’s strategic plan that has also seen his firm expand geographically with the previous acquisition of Amcom and FX Networks, and diversify into the consumer space via its merger with M2.

While the TPG/iiNet merger brought two similar companies together, and as such potentially reduced the number of players in the market, the Vocus/M2 combination brings two different companies together – one operating in the business market and one operating in the retail market. This will allow the companies to share resources and attract better deals from the various ICT (wholesale) providers they do business with.

Macquarie Telecom is an integrated telco providing a full range of hosting, data, voice and mobile services to the business and government market. It also offers a range of cloud services including security, storage, backup-as-a-service and virtual hosting / data centre services.

Foxtel is the largest subscription television provider in Australia. Foxtel will continue to see declining ARPU as the proportion of its pay TV customers decline due to the migration to other Subscription Video On Demand (SVOD) providers which have much lower ARPU.

Foxtel has also moved into the SVOD arena in an effort to increase subscriber availability options. Although there has been steady growth in subscription TV services, in coming years customer viewing on the platform will have been greatly changed following the launch of services by OTT providers such as Stan and Netflix as well as SVOD options being marketed by FTA broadcasters.

The launch of a bundled service of broadband, telephony and STV via the NBN presents a major shift in the services that the company can provide for the consumer market. BuddeComm sees this as an important catch-up move to compete with the other ISPs that also provide bundled services.

Key developments:

  • TPG is delivering an extensive FttB service to apartment buildings in capital cities.
  • In 2017 TPG made a bold move to become the fourth mobile operator in Australia.
  • During 2017 Vocus has been struggling despite strong growth over the past few years.
  • Foxtel has moved into the SVOD arena in an effort to increase subscriber availability options.

Key companies mentioned in this report:

TPG Telecom, iiNet, AAPT, B Digital, Pipe Networks, Soul, Comindico, FOXTEL, AUSTAR, Optus, News Corporation, Telstra, Macquarie Corporate Telecommunications, Macquarie Telecom, Vodafone

Table of Contents

  • 1. Market analysis
    • 1.1 Revenues Statistics and Market Forecast 2nd Tier Telcos
  • 2. FOXTEL
    • 2.1 Company Overview
    • 2.2 Company analysis
    • 2.3 Operational results
      • 2.3.1 2017
      • 2.3.2 2002 - 2016
    • 2.4 Financial results
      • 2.4.1 FY 2016 - 2017
      • 2.4.2 FY 2011 - 2015
    • 2.5 Acquisitions, alliances and subsidiary companies
      • 2.5.1 Acquisition of AUSTAR
    • 2.6 Products and Services
      • 2.6.1 Digital pay TV
      • 2.6.2 NBN / Triple-play services
      • 2.6.3 Satellite services
      • 2.6.4 Foxtel Play and Foxtel Go
      • 2.6.5 Foxtel Now
      • 2.6.6 Historic - Presto
      • 2.6.7 History of Video on demand
      • 2.6.8 The iQ3 set-top box
      • 2.6.9 Operating centres in Sydney and Melbourne
    • 2.7 Company history
  • 3. Macquarie Telecom
    • 3.1 Company Overview
    • 3.2 Financial results
    • 3.3 Data network
      • 3.3.1 Metro Access Network (MAN)
      • 3.3.2 Mobile network
      • 3.3.3 Partnership with Tata Communications
    • 3.4 Services
      • 3.4.1 Hosting solutions
      • 3.4.2 Telco
      • 3.4.3 Data centres
      • 3.4.4 Macquarie Telecom Enterprise Cloud
    • 3.5 Company history
  • 4. TPG Telecom Limited
    • 4.1 Company information
      • 4.1.1 Overview
      • 4.1.2 Company structure
    • 4.2 Company analysis
      • 4.2.1 TPG’s Bold Move to Become Australia’s Fourth Mobile Operator
      • 4.2.2 TPG’s star continues to rise
      • 4.2.3 Competitive Analysis Profile
    • 4.3 Company Acquisitions
      • 4.3.1 Acquires AAPT
      • 4.3.2 Acquisition of iiNet
    • 4.4 Company Investments
      • 4.4.1 Invests in Amcom
      • 4.4.2 Invests in subsea cable
    • 4.5 Recent Company Developments
      • 4.5.1 Spectrum for New National Mobile Network
      • 4.5.2 TPG to Become the Fourth Mobile Operator in Singapore
      • 4.5.3 Dark Fibre and MVNO Agreement with Vodafone Australia
      • 4.5.4 Spectrum Acquisition
      • 4.5.5 Nationwide fibre capability for medical imaging specialist
      • 4.5.6 FTTB Services To Go Live
    • 4.6 Network
      • 4.6.1 Overview
      • 4.6.2 PIPE Networks
    • 4.7 Financial results
      • 4.7.1 Year ending July 2017
      • 4.7.2 Historic
    • 4.8 Operational statistical overview
      • 4.8.1 Current
      • 4.8.2 Historic
    • 4.9 Products and services
      • 4.9.1 Residential services
      • 4.9.2 Business and wholesale services
      • 4.9.3 International connectivity
      • 4.9.4 National infrastructure developments
    • 4.10 Company history
    • 4.11 iiNet
      • 4.11.1 Financial results
      • 4.11.2 Operating results
      • 4.11.3 Network
      • 4.11.4 Acquisitions, alliances and subsidiary companies
      • 4.11.5 Products and services
      • 4.11.6 Company history
  • 5. Vocus
    • 5.1 Vocus
      • 5.1.1 Overview
      • 5.1.2 Company Strategy Update – late 2017
      • 5.1.3 Company analysis - 2017
      • 5.1.4 Financial Results
      • 5.1.5 Q1 FY 2018 - Operational Highlights:
      • 5.1.6 Operations Results - FY2017
      • 5.1.7 Acquisitions / Mergers
      • 5.1.8 Network
      • 5.1.9 Recent Developments
      • 5.1.10 Data Centres
      • 5.1.11 Products and Services
    • 5.2 M2 Communications – Historic Overview
      • 5.2.1 Overview
      • 5.2.2 Financial results
      • 5.2.3 Services
      • 5.2.4 Products and services
      • 5.2.5 Acquisitions
    • 5.3 Nextgen Network – Historic Overview
      • 5.3.1 Company Overview
      • 5.3.2 NBN - Regional Backbone Blackspots Program (RBBP)
      • 5.3.3 Network
      • 5.3.4 Products and services
      • 5.3.5 Acquisitions and alliances
      • 5.3.6 Company history
    • 5.4 Amcom – Historic Overview
      • 5.4.1 Company Overview
      • 5.4.2 Financial results - historical
      • 5.4.3 Network
      • 5.4.4 Acquisitions, alliances and subsidiary companies
      • 5.4.5 Products and services
      • 5.4.6 Company history
      • Table 1 –Second-tier telcos – total revenue and annual change – 2010 - 2019
      • Table 2 –Second-tier telcos – revenue ($million) by major provider – 2014 - 2017
      • Table 3 –Second-tier telcos – Revenue and Market Share by major provider – 2017
      • Table 4 – Historic - Second-tier telcos – revenue by provider – 2010 - 2014
      • Table 5 – Historic - Second-tier telcos – revenue by major provider – annual change – 2010 - 2014
      • Table 6 – Historic - Second-tier telcos – revenue by major provider – relative market shares – 2010 - 2014
      • Table 7 – Historic - Second-tier telcos – revenue by provider (historic) – 2004 - 2007
      • Table 8 – Historic - Second-tier telcos – revenue by major provider – relative market shares – 2004 - 2007
      • Table 9 – Total FOXTEL and wholesale subscribers – 2012 - 2017
      • Table 10 – Historic - FOXTEL and wholesale subscribers by annual change – 2012 - 2014
      • Table 11 – Historic - Subscriber annual churn rate – 2002 - 2014
      • Table 12 – Historic – FOXTEL and wholesale subscribers – 2002 - 2011
      • Table 13 – Historic – FOXTEL and wholesale subscribers by annual change – 2003 - 2011
      • Table 14 – Historic – FOXTEL subscribers by type – 2008 - 2011
      • Table 15 – FOXTEL – Key Financial Indicators Revenue ($million) – 2015 - 2017
      • Table 16 – Historic - FOXTEL – Key Financial Indicators – 2014 - 2015
      • Table 17 – Historic - FOXTEL – Revenue and Net Income – 2012 - 2015
      • Table 18 – Historic - FOXTEL - Revenue and Net Income (US$) – 2012 - 2015
      • Table 19 – FOXTEL monthly ARPU – 2003 - 2016
      • Table 20 – Historic - AUSTAR key operating and financial figures – 2009 - 2012
      • Table 21 – Macquarie key financial indicators – 2008 - 2017
      • Table 22 –Macquarie revenue by division- revenue $ (million)– 2015 - 2017
      • Table 23 – Historic - Macquarie revenue by division – 2004 - 2015
      • Table 24 – Historic - Macquarie revenue by division – 2004 - 2014
      • Table 25 – Historic - Macquarie – annual change in revenue by division – 2005 - 2014
      • Table 26 – Historic - Macquarie – revenue contribution by division – 2004 - 2014
      • Table 27 – TPG Revenue, EBITDA and NPAT– 2001 - 2017
      • Table 28 – TPG – revenue ($ million) breakdown by division – 2009 – 2017
      • Table 29 – TPG – consumer segment revenue ($ million) – 2016 - 2017
      • Table 30 – TPG – corporate segment revenue ($ million) – 2016 - 2017
      • Table 31 – TPG – Broadband ARPU ($/month) – 2016 - 2017
      • Table 32 – iiNet – Broadband ARPU ($/month) – 2016 - 2017
      • Table 33 – TPG consumer – revenue breakdown by market segment (consumer) – 2010 - 2016
      • Table 34 – TPG – Revenue by Division – 2016
      • Table 35 – Historic - TPG – broadband ARPU – 2009 - 2016
      • Table 36 – TPG – Group Broadband Subscribers (thousands) by Division– 2014 - 2017
      • Table 37 – TPG – Consumer Broadband Subscribers (thousands) by Product – 2014 - 2017
      • Table 38 – iiNet – Broadband Subscribers (thousands) by Product – 2015 - 2017
      • Table 39 – TPG – Group Mobile Subscribers (thousands) by Division– 2014 - 2017
      • Table 40 – iiNet Fixed Voice – subscribers and ARPU – 2015 - 2017
      • Table 41 – Historic - TPG Group – Total Subscribers, Mobile Subscribers – Jan 2016
      • Table 42 – Historic - TPG (only) – broadband subscribers on/off-net and bundled – 2008 - 2016
      • Table 43 – Historic - TPG on-net versus Soul off-net home phone subscribers, annual change – 2009 - 2015
      • Table 44 – Historic - TPG versus Soul mobile subscribers – 2008 - 2015
      • Table 58 – Vocus - key financial parameters – 2012- 2017
      • Table 59 – Vocus – Revenue Split by Division – 2016 - 2017
      • Table 60 – Vocus – Revenue Split by Product – 2016 - 2017
      • Table 61 – Vocus key financial parameters – 2016
      • Table 62 – Vocus Australia - Consumer Broadband Subscribers – 2016 - 2017
      • Table 63 – M2 key financial parameters – 2015
      • Table 64 – M2 revenue makeup and annual change – 2004 - 2015
      • Table 65 – M2 key financial performance indicators – 2004 - 2015
      • Table 66 – M2 voice services performance indicators – 2013 - 2015
      • Table 67 – M2 mobile services performance indicators – 2013 - 2014
      • Table 68 – M2 internet services performance indicators – 2013 - 2014
      • Table 69 – M2 energy services performance indicators – 2013 - 2014
      • Table 70 – M2’s acquisitions – 2005 - 2013
      • Table 71 – Amcom – operating revenue – 2000 - 2014
      • Table 72 – Amcom – key financial indicators – 2010 - 2014
      • Table 73 – Amcom – EPS – 2010 - 2014
      • Table 74 – Amcom revenue by service division – 2004 - 2013
      • Table 75 – Amcom revenue by service division – 2012 - 2014
      • Table 76 – Amcom’s acquisitions – 2001 - 2014
      • Chart 1 – Second-tier telcos – total revenue ($ million) and annual change – 2010 – 2019
      • Exhibit 1 – FOXTEL at a glance
      • Exhibit 2 – AUSTAR brief company history – 1994 - 2012
      • Exhibit 3 – Macquarie Telecom (Macquarie) at a glance
      • Exhibit 4 – Macquarie Telecom data network PoPs
      • Exhibit 5 – TPG Telecom Limited (TPG) at a glance – including key results
      • Exhibit 6 – TPG – Competitive Analysis Profile – Highlights
      • Exhibit 7 – TPG – Competitive Analysis Profile
      • Exhibit 15 – M2 Telecommunications Group Limited (M2) at a glance
      • Exhibit 16 – M2 services and target market by brand
      • Exhibit 17 – Primus Telecommunications Australia at a glance
      • Exhibit 18 – Primus brief company history
      • Exhibit 23 – Amcom Telecommunications Limited (Amcom) at a glance - historical
      • Exhibit 24 – Subsidiary companies
      • Exhibit 25 – Amcom – overview of products and services by division

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Number of pages 135

Status Current

Last updated 15 Nov 2017
Update History

Lead Analyst: Phil Harpur

Contributing Analyst:

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