Optus' NBN payday

The ACCC cops grief for killing broadband competition as Optus gets $800 million for its HFC network. But will the Coalition abide with the deal post-election?

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. 

A "dark day" for the ACCC and an $800 million day for Optus

The Australian Competition and Consumer Commission’s (ACCC) decision to approve Optus’s $800 million deal with NBN Co removes the last vestige of infrastructure-based competition for the national broadband network. That’s fantastic news for the Gillard government, NBN Co and most importantly Optus. However, it is equally devastating news if you happen to subscribe to the view that customers would be better served by the presence of an alternative broadband network.

The ACCC flagged the move a month ago so the payday was always on the cards for the telco but the regulator has certainly put itself in a tight spot here.  The first salvo of invectives has come from the shadow communication and broadband minister Malcolm Turnbull, who has lamented the decision as a “dark day for the ACCC” and the attack has been followed up by Liberal MP Paul Fletcher who has taken the regulator to task  for killing competition.

ACCC boss Rod Sims usually doesn’t mince his words when it comes to justifying the regulator’s decisions but in this case the competition tsar has had little choice but to address the issue. According to Sims, the Optus decision has been his toughest call to date mainly because the deal stinks on paper. You can’t foster competition by removing a competitor. But as Sims points out the competitive mechanics were trumped in this case by the practicalities – such as the public benefits of the NBN and avoiding the cost of running duplicate networks.

Whether you buy Sims argument boils down to one major consideration- were the HFC networks ever a viable competitive network to begin with?  The jury is out on this because both Telstra and Optus made it abundantly clear that they weren’t going to put money into their respective network even before the NBN got started. The HFC networks created selected areas of connectivity but there was very little chance of these ever being extended. 

Given Telstra’s dominant position in the HFC space pre-NBN, Optus’ network was a poor second at the best of times. Was it worth $800 million? Probably not, but with Telstra making billions by cashing in its infrastructure chips it was only natural that the ACCC would give Optus some sort of a soother.

There is no doubt that the deal will help NBN Co with its uptake numbers as it absorbs the Optus subscriber base but don’t expect the HFC networks to quietly go into the night. The networks can be put to good use as the rollout continues and the Coalition will undoubtedly revisit this issue when it comes to power.

Tweaky.com moves up the ladder

Moving to the local start-up scene, where the dream of a former civil engineer and a DJ looks to have finally taken the critical first step to fruition. That dream is Tweaky.com which looks to empower local website developers and make life easier for anyone looking to give their website a new look.

Founded by Australian entrepreneurs Ned Dwyer (a former DJ) and Pete Murray (the civil engineer) Tweaky.com has grabbed a $450,000 investment from 99designs.com founder Mark Harbottle, angel investor Leni Mayo and the SitePoint Group.

According to CEO Dwyer, the site is designed to provide web site owners with a cost effective customisation option, one that won’t cost them in excess of $150 an hour. Web site customizations (called “Tweaks”) start at $25 each, come with a 100 per cent money back guarantee, and are performed by freelance web developers hand-picked by Tweaky. The start-up takes a 50 per cent cut from all tweaks.

Apart from the money, Harbottle and Mayo will bring a lot of the market savvy that will be crucial to making Tweaky a success. Both are seasoned entrepreneurs and investors who have built multiple global leading businesses.

Dwyer is quick to point out that Tweaky.com isn’t a crowdsourcing outfit.

Tweaky.com is a marketplace but it’s not based on a crowdsourcing model. We hand select the best web developers from a continual stream of applicants based on strict selection criteria, we verify them, and they undergo some basic training about our platform,” Dwyer told Technology Spectator.

“We quote the web site customisation jobs as they come in and match them to an approved developer who completes the job.”

The investment in Tweaky by 99designs founder, Harbottle, highlights how more successful Australian entrepreneurs are filling the funding local void by investing in local start-ups that have global potential.

Meanwhile, 99designs has also announced the launch of a new not-for-profit initiative called "99nonprofits". The program is designed to allow NGOs around the world to launch free design projects on the crowdsourcing platform.

The company is kick-starting the initiative with a mission to provide 99 non-profit groups with free contests in the months ahead. So far seven organisations have come on board.

NewSat’s funding checklist

Listed Australian satellite company, NewSat has ticked another couple of important thing from its Jabiru checklist with the company getting the final approval from the US based export credit agency, Ex-Im Bank for a $US280 million direct loan. 

NewSat has also secured further export credit funding of $US102.74 from COFACE, the export credit agency acting on behalf of the French government, to finance the building of the rocket by Arianespace, which will launch Jabiru-1 into orbit.

The financial close of the Ex-Im Bank and COFACE debt facilities were conditional on further funding of  approximately $US200 million, and NewSat will now seek approval of its shareholders to raise the her amount of ordinary equity at its general meeting this week.

Meanwhile, NewSat has also sealed its largest single teleport contract to date, awarding BAE Systems a $US8.59 two-year contract to provide hardware and satellite communications services through NewSat’s Perth-based teleport to the Wheatstone Project.

Under the contract BAE, a NewSat partner, will supply offshore satellite communications to enable high speed connectivity between the NewSat’s Perth office, offshore platform and production facility in Onslow.

 Wrapping up 

In other Australian news, publishing and entertainment group Peer Group Media has acquired exclusive license to Kiwi ticketing and social marketing platform Eventfinder. Founded and developed in New Zealand, Eventfinder is a listings service that offers event guides, independent ticketing, social marketing and data and analytic tools for promoters and venue managers. The outfit recently completed a significant VC funding round and has set its sights on launching in the United States and South-East Asia.

Business process management system (BPMS) and Platform as a Service (PaaS) software provider Cordys has opened its first Australian office in Melbourne. The expansion also sees the appointment of Steve Thomas as the head of the company’s Australia-New Zealand operations. The company has CSC and Fujitsu and as major partners in the market and is already working with Brisbane-based cloud and ICT services provider Aptus International Services.

Listed educational games and media company Entellect Limited has successfully completed the first phase of beta testing for its KNeoWORLD Games Portal. The testing was carried out over a six week period in a New York City school and involved more than 100 kids, aged between six and 16. According to Entellect’s CEO James Kellet, the data will now be analysed for future product development. Similar testing and data analytics process is currently underway at Entellect’s joint venture, Knowledge Nation. The KNeoWORLD portal’s full commercial launch remains on schedule for August/September 2012.

SAP Australia and Australian IT services company, CN Group today have signed up Queensland-based start-up Outback Armour as their latest customer. The company, which provides accessories for off-road vehicles, has selected SAP Business ByDesign to deliver an integrated SaaS based ERP solution.   

The Royal District Nursing Service (RDNS) has picked InterSystems Corporation to provide its informatics platform. The deal will see Australia’s largest provider of home nursing run the InterSystems HealthShare to manage its information systems, workflow support and implement active analytics to improve services and cut costs.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles