TECHNOLOGY SPECTATOR: M2's optimum Primus move

A deal to pick up Primus Australia’s customer base and infrastructure is going to make M2 Telecommunications a significant player in the post-NBN landscape.

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.

Primus Australia sold as M2 busts a move

We start in the telco space, where US-based Primus Telecommunications Group (PTGi) has sold its Australian operations to M2 Communications. The surprise deal will see M2 Telecommunications pick up Primus Telecom Australia’s customers and network assets for $192.4 million. The acquisition covers 165,000 retail and wholesale contracts, the Primus and iPrimus brands and about 500 staff in Australia. PTGi said in a statement that the sale had come out of a review conducted by a special committee of the board of directors, which was established to value strategic alternatives to increase shareholder value.

The real prize here is Primus’ fibre backbone, which is spread across over 60 cities in Australia, and which has helped it win a number of major contracts – with Payless Shoes, Hungry Jack's and energy retailer Australian Power and Gas. The Primus/M2 deal is the latest deal in the consolidation merry-go-round and it’s actually good to see someone other than iiNet make a substantial move in the market. Primus Australia’s customer base and that infrastructure is going to make M2 a significant player in the post-NBN landscape.

Facebook’s latest acquisition is all about business

It’s hard to keep Facebook out of the news at the moment and after forking out $US1 billion on Instagram the social network has now loosened the purse strings to make another handy buy. The target this time is San Francisco-based start-up Tagtile, a customer loyalty application that connects businesses with customers. This is how the whole thing works: Tagtile provides merchants with the hardware (a small, free box), while customers download the app that lets them win discounts, loyalty points and most importantly share their views on the business on Facebook or Twitter from their phone. What you end up with is a system that provides buyers with customised information based on the stores they visit and retailers with data to sharpen their marketing campaigns.

While Facebook broke with convention in paying top dollar for Instagram, the Tagtile buy is a lot like the acqui-hire deal it’s used to making. Facebook is acquiring all of Tagtile's assets but the real trick will be to see how it integrates them post IPO. E-commerce and NFC-style solutions may not be one of Facebook’s core competencies but it is a handy buffer to have up your sleeve. The one thing Facebook has lots of is data, and outfits like Tagtile could hold the key to how it sells this data to brands and retailers.

Ten Network, Facebook

Facebook is probably going to make a few more of these Tagtile-style acquisitions as the IPO draws nearer but for now the attention in Australia is about what Ten Network is supposedly cooking up with the social network. According to Fairfax papers, the two are mulling an alliance that would lead to them sharing content, audiences and advertising revenue. The relationship will, reportedly, involve Ten integrating content for some of its larger shows onto the Facebook platform. This proposition is likely to be something more than just a simple Facebook page for Ten’s programming or the traditional display advertising set-up.

A deal of this sort will be a major move for Facebook in Australia and build on its popularity Down Under, while Ten will finally be able to leverage social media into its strategy of targeting the younger, social-media savvy audience. The big question mark in all this is, why Facebook would like to lock itself in with Ten as opposed to its more successful rival Seven? In fact, Facebook could easily choose to cut deals with all the channels as its disposal, so it will be interesting to see how this potential marriage pans out.

Vevo comes to Australia

Staying in the media space, Spotify may still be in holding pattern over its long awaited launch in Australia but its rival Vevo is all set to make its debut tomorrow. The music video platform, a joint venture between Sony Music Entertainment, Universal Music Group and Abu Dhabi Media, is coming to Australia courtesy of a partnership with MCM Media. Vevo already has a substantial presence in Australia thanks to YouTube and Facebook but the partnership will now see a standalone vevo.com site come to Australia.

Vevo has shown that it has what it takes to build a substantial audience since its launch in December 2009. The service attracts 3.3 billion video views per month, including views from 5.5 million unique Australian visitors to its YouTube channel, primarily of exclusive video premiers from partnered artists. The stand-alone site will feature a number of extra features.

According to MCM Entertainment Group chief executive Simon Joyce, the partnership will combine MCM’s existing portfolio of websites with Vevo’s digital properties. "The addition of Vevo to our existing websites, Take40.com and TheHotHits.com, will ensure MCM Media is delivering Australian music fans unparalleled access to artists while giving advertisers greater opportunity to engage with music lovers,” Joyce said.

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