TECHNOLOGY SPECTATOR: Telstra's bold iiNet call

Telstra indulges in a spot of crystal ball gazing and finds a TPG/iiNet deal on the cards, while CSG looks to get over its recent disappointment.

Telstra is confident a TPG takeover of iiNet is only a matter of time as consolidation continues in the telco sector. Meanwhile, CSG Limited could look to put the IT side of its business up for sale as it licks its wounds following the breakdown of talks with NEC, while Facebook seeks to boost investor confidence in its IPO.

Telstra's crystal ball on iiNet/TPG

The telco sector has become a hotbed for M&A action and with iiNet swallowing Internode before Christmas last year, all eyes will be on iiNet shareholder TPG in 2012 when we will find out just how serious it is about making a full takeover play for the Perth-based internet service provider. TPG holds 7.24 per cent of iiNet and this stake could well be the beachhead before an eventual assault.

That’s certainly how Telstra seems to think things will play out if its latest newsletter to its retail staff is any indication. The Telstra communiqu, highlighted by Delimiter, states that a full takeover push by TPG is only a matter of time and will propel the ISP to the third spot in the broadband market.

Well not quite, because the Internode buy has already made iiNet the third player in the market and if, and when, TPG comes to the table, a successful deal will actually see TPG leapfrog SingTel Optus to become Telstra’s biggest rival.

We will have to wait and see whether the scenario plays out accordingly, but there is no denying consolidation is the name of the game for telcos, in a sector where fixed-line broadband penetration is reaching saturation levels and customer growth is slowing down.


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