Tech Deals is a weekly column covering the latest deals in one of the busiest sectors for M&A. To read previous articles go to our Tech Deals page.
Huawei’s charm offensive
Huawei has capped off an eventful week with some fighting words from chairman John Lord who has told ABC’s Inside Business that the Chinese giant is still in the mix to win some deals with NBN Co and more importantly, that the National Broadband Network (NBN) isn’t the only game in town.
According to Lord, Huawei never envisioned itself playing a role in the core parts of the network but there are other parts of the NBN where it can still play a role. Now, this may seem like wishful thinking given the reaction from Canberra but let’s not forget that Huawei is a reputable global heavyweight and has been involved in similar projects in New Zealand and the UK.
However, the biggest impediment for Huawei, apart from the concerns raised by ASIO, is the fact that its’ keenest rival Ericsson has already established itself in the NBN scene after scoring a 10-year wireless contract, potentially worth $1.1 billion, with NBN Co in June last year.
With news this morning that Huawei had been under the gaze of cyber security officials in the department of the federal attorney-general since 2008, Lord’s ambition of keeping Huawei involved with the NBN may come to naught but there is still plenty of money to be made in Australia
As I mentioned last week, the real game for Huawei now will be to get as close as possible to Telstra, especially in the LTE space. Telstra's current partnership with Ericsson which has been the key driver of the Next G project will make life difficult for Huawei but the Chinese company does have the right mix of experience and technical savvy to make a compelling case to Telstra. In that respect, the appointment of Motorola China president and former Microsoft regional chief executive, Tim Chen, on Telstra’s board may actually be good news for Huawei. Chen’s appointment is a signal that Telstra is keen to expand into Asia and that’s good news for Huawei.
The Chinese giant’s efforts to mollify security concerns in the political corridors may not have worked out as planned but Lord’s message is clear Huawei is here to stay for the long haul and its two year sponsorship deal with the Canberra Raiders is a solid step in winning hearts and minds of the Australian public. The pollies may have their doubts but the Canberra public probably won’t be too concerned about Huawei’s alleged connections with the Chinese military or cyber espionage.
The bottom line for Huawei is that it wants to be number one across every market segment in which it competes, whether it is networks, devices, software or managed services. Making that dream a reality will require the company making serious inroads in the consumer space, as Huawei ventures into new business areas like mobile handsets and Enterprise IT, the Raiders partnership is just a sign of things to come.
Optus’ latest heavyweight recruit
Staying in the telco space, Optus has found a heavyweight candidate to fill the gap left by the departure of Maha Krishnapillai in November with the appointment of David Epstein as its corporate and regulatory affairs boss,
Epstein brings with him a formidable résumé, having previously worked as the chief of staff to Kevin Rudd and more recently leading the public affairs team at BHP Billiton.
Krishnapillai’s move to Australia Post had left a significant hole in Optus’ management roster but the telco has certainly picked a heavy hitter in Epstein, who has worked for heavyweights like BHP and Qantas and can also mix it up with the best in Canberra.
He will need all of his skills as Optus prepares itself for a sector that is undergoing a significant change. The 4G spectrum auction later this year and just what happens to the NBN next year will be two critical issues for Optus and Epstein’s experience could prove to be a valuable asset for the telco.
Rio Tinto forges ahead with automation program
Moving to the mining sector, Rio Tinto is forging ahead with its ‘Mine of the Future’ program with the miner partnering with engineering research firm iGate Patni to open a state-of-the-art innovation centre in Pune, India.
The move will see Rio spend up to $80 million over the next five years to work on the next big breakthroughs in automated mining technology. The miner is already ahead of the pack in the tech game and Rio’s management says that the new centre will aim to find practical ways of applying what is developed at its existing centres in Australia, Canada and the United Kingdom.
“This partnership will enable us to move our innovations from concept stage to reality more efficiently through the work of a dedicated team of specialized engineers,” said John McGagh, Rio’s head of innovation.
Cisco Systems’ NDS headache
It looks like Cisco Systems’ first major acquisition in two years has brought with it a substantial headache for the company. Earlier this month, Cisco paid $US5 billion to buy pay TV software maker NDS, which is owned by private equity firm Permira and Rupert Murdoch’s News Corporation.
As it turn out, NDS has since become embroiled in a controversy after The Australian Financial Review and BBC’s Panorama program alleged that the company was involved in piracy and hacking in a bid to destabilise Australia’s pay TV industry. With the News Corp and the media outlets now embroiled in legal argy bargy the entire situation is an unnecessary complication for Cisco.
According to Ovum analyst Adrian Drury, the hacking allegations present a difficult situation for Cisco.
“While the standard response would be to suck NDS into the wider Cisco organization and bury the brand post acquisition, this is exactly what Cisco must not do if it is to avoid destroying $5 billion of shareholder value with this deal,” says Drury.
Cisco has so far stayed mum on the hacking allegations and Drury says that NDS will most likely operated as a ring-fenced business, albeit within the Video Technology group.
As for the allegations, NDS has demanded a retraction from the AFR and the BBC but so far both outlets are sticking to their stories.
StyleTread welcomes Starfish Ventures; OurDeals gets a new boss
In retail news, online shoe retailer StyleTread has welcomed Starfish Ventures into its list of existing investors Lakestar, Nine Entertainment Co. and Adinvest and to participate in the Company’s Series C financing of $12 million. Meanwhile, local group buying outfit OurDeals has appointed the former CEO of Shopping.com, Infochoice.com.au and Choosi, Shaun Cornelius as its new CEO. OurDeals is a joint venture with News Limited and Network Ten, and Cornelius’ appointment demonstrates continued commitment from shareholders. Cornelius replaces former OurDeals CEO and founder Julian Holman.
Network equipment maker Ciena has joined forces with SafeNet to jointly sell high-speed jointly sell high-speed, low-latency Ethernet link encryption services for commercial and government networks. Meanwhile, Netgear has sealed a partnership with Australia’s Neural Networks to offer local SMBs a comprehensive data backup and disaster recovery option with the launch of Cloud Backup for ReadyNAS.
Brennan IT has selected Equinix, a provider of global data centre services, as part of an ongoing expansion of its cloud infrastructure and services platform. The relationship will see Brennan IT transition many of its NSW-based cloud services to Equinix’s Sydney data centre, while also providing Brennan IT with the opportunity to take advantage of Equinix’s global platform of state-of-the-art facilities, especially in the United States.
In appointment news, enterprise risk management software provider Active Risk has appointed Nick Scully as vice president of sales & services for its EMEA and APAC regions. Elsewhere, full-service digital agency Amnesia Razorfish has bolstered its senior team with the appointment of technology expert Leslie Nassar as technology director.
Nassar joins the agency from TweeVee TV, a company he founded and managed for five years. At TweeVee TV, Nassar conceptualised, developed and delivered moderation and broadcast integration of Twitter for ABC1's Q&A, which has the highest social activity of any TV program in Australia.