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.
Australian telcos are in the frontline when it comes to prospective deal making with Telstra looking to potentially make further inroads in the pay TV market while Optus and Vodafone are busy shoring up their positions to keep their cashed up rival at bay.
Telstra's ConsMedia stretch
We start with Telstra which is keen to flex its muscles and put its burgeoning coffers to good use. The telco has a number of avenues at its disposal but the one generating most of the talk is the possible move to lift its stake in Foxtel, provided James Packer does decide to sell his 50.1 per cent stake in Consolidated Media Holdings.
CMH has confirmed that it was in “very preliminary discussions concerning a possible control proposal”, so the early indications are that the game is afoot.
The outcome will depend on whether the suitors are willing to fork out the reported $4 a share price that Packer is seeking and just what the Australian Competition and Consumer Commission might have to say on the deal.
It’s safe to say that in case of Telstra the watchdog will have plenty to say, especially if the scrutiny around the Foxtel/Austar deal is anything to go by. While analysts are quick to point out that $4 a share might be too rich for Telstra the real road block here will the ACCC.
Given what the deal could mean for Telstra, especially in terms of growth, the telco may not be as dissuaded by Packer’s asking price as one would like to think. As mentioned in last week’s NBN BUZZ, differentiation is the name of the game for telcos. A deal between Packer and Telstra would also be great news for Foxtel, which has been battling slowing subscription numbers. A coordinated strategy built on the back of bundling will be a boon for both companies when it comes to reach and content.
That’s exactly the reason why the ACCC will raise a ruckus if a bid from Telstra does see the light of day. Given Telstra’s scale any move that reinforces its dominance, especially with regards to content, over its rivals will not be seen kindly by the regulator. As for Packer, he might not be inclined to wait around and ride out a lengthy ACCC inquisition especially If News Limited or Kerry Stokes ‘ Seven Group put an offer on the table.
Optus cement's second place
Meanwhile, Optus and Vodafone have forged an alliancethat looks set to benefit both telcos, although Optus’ will probably the happier of the two parties. The telco’s decision to restructure its Australian operations and the infrastructure deal with Vodafone will cement Optus as the second major player in the Australian market. The Australian mobile space is an oligopoly and as far as network operators are concerned the final equation is always going to come down between Telstra, Optus and Vodafone.
The NBN has not changed the competition stakes in the mobile space, because by cashing in its copper Telstra has maintained its dominance. Optus has also managed to achieve this, although their windfall was not quite as hefty as Telstra’s, while Vodafone is in a recovery phase. The impetus for Optus is to cut costs and that’s what the restructure is all about, by shedding the jobs in the middle management the telco can now sharpen its focus on customer interaction. Today’s customers are seeing telecoms as utility and that means that companies will have to become far more sophisticated when it comes to bundling, churn management and basically keep customers happy.
Vodafone's rehabilitation underway
As for Vodafone, the telco has not only joined forces with Optus on infrastructure but has also outsourced its media content service to mobile solutions provider mia. The deal will see mia supply the telco’s customers with music, gaming and video content. Bringing all content under one umbrella is a step in the right direction for Vodafone and another sign that the telco’s new boss Bill Morrow has hit the ground running. Morrow has a solid history with Vodafone, credited to have revised the flagging fortunes of Vodafone’s Japanese and European businesses in the early half of the last decade, and he is certainly living up to his reputation as turnaround specialist.
Facebook makes another acquistion
With all eyes on Facebook’s impending IPO the social network is seemingly on a mission to cover all of its bases as far as mobile social media is concerned. After the acquisition of Instagram and TagTile, the social network has bought location-based app Glancee.
Glancee lets users explore profiles of people nearby and receive notifications of people who have common friends or mutual interests and while the detail of the deal haven’t been disclosed Facebook has shut the service and absorbed the talent.
While the IPO will be a key test for Wall Street’s appetite for tech stocks, bears have been lining to take pot shots at the social network’s frothy valuations. Their scepticism isn’t entirely unfounded but Facebook’s founder Mark Zuckerberg has received a ringing endorsement from the ‘oracle of Omaha’ Warren Buffett.
Buffett has told CNBC that Zuckerberg is doing the right thing by keeping a tight grip on the company even after it goes public. It’s an issue that has raised some concerns among the Facebook faithful but Zuckerberg has Buffett’s tick of approval. However, the Berkshire Hathaway boss has made it clear that he has no plans to buy into the IPO.
LinkedIn's loosens its purse strings
Meanwhile, LinkedIn has loosened its purse strings to buy the professional content-sharing community, SlideShare for about US$119 million. The deal breaks down to roughly 45 per cent cash and 55 per cent stock, and is expected to close during the second quarter of this year.
SlideShare, which has offices in San Francisco and New Delhi, launched about five years ago and has 29 million monthly users. SlideShare co-founder Rashmi Sinha said in a blog post that the service would continue unabated.
Yahoo boss under fire
Elsewhere, Yahoo’s boss Scott Thompson is in the line of fire as activist hedge fund investor Third Point demanded that the internet company fire him for padding up his resume. As it turns out has a bachelor's degree in accounting not computer science. However, with the sale of a substantial stake in Alibaba looming on the horizon Thompson’s accounting acumen could well prove to be more useful that any supposed computer science skills.
IT infrastructure provider Thomas Duryea Consulting has signed a partnership with California-based enterprise mobility solutions provider Good Technology. The partnership will see Thomas Duryea leverage the Good for Enterprise suite of solutions to bolster the mobility services that it offers to its customers.
In other local news, International IT solutions and managed services provider, Logicalis Group, has agreed to acquire Brisbane-based Corpnet from e-Business Systems Ltd. Corpnet provides data centre, cloud and managed services solutions to the Queensland mid-sized and enterprise markets. The acquisition consideration is comprised of $2.7 million on completion with an additional potential earn-out payment of $600,000.
Elsewhere, Japan’s AIP Global has completed the acquisition of Sydney-based online financial service provider Enfinium International Holdings Limited. Enfinium has two leading forex platforms, 'Vantage FX' and 'Enfinium', in the market. AIP Global purchased 55.6 per cent of Enfinium's outstanding shares from Furuya Consultants Limited by way of exchanging new ordinary shares of AIP Global.
Finally, the Australia and New Zealand Recycling Platform Limited has added 16 new members to its industry-led e-waste recycling service. The new members are Amicroe Australia, Bluechip Infotech Pty Ltd, Brother International (Aust) Pty Ltd, Dell Australia Pty Ltd, Dicker Data Ltd, Direct Memory Access Pty Ltd, EMC Global Holdings Company, Epson Australia Pty Limited, Medion AG, NEC Australia, Pioneer Electronics Australia Pty Ltd, Rectron Electronics Pty Ltd, Targus Australia Pty Ltd, The Reject Shop, Thorn Group Ltd and Uniden Australia.
Canon, Epson, HP, Panasonic and Toshiba joined ANZRP in April 2012.