Telstra's NBN tough talk

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. 

NBN Co has started the week on the front foot, signing a $300 million deal with France's Arianespace to get its two Ka-band satellites into orbit but all the focus is on what Telstra's up to when it comes to protecting its NBN billions.

We will start with the satellites because the Arianespace deal ensures that the satellite component of the NBN rollout remains firmly on track. With the Arianespace deal now set in stone, NBN Co has now committed over $1.3 billion dollars to the satellite component - $620 million on getting them built by Loral/Space Systems; $405 million on satellite ground stations; and now $300 million on getting the satellites into orbit.

All that remains to be done is getting the approval for the four orbital parking slots from the ITU, a process, that both NBN Co boss Mike Quigley and Communications minister Stephen Conroy, are hoping will proceed without too many hiccups.

The satellite component is one aspect of the overall NBN rollout that has by and large gone to script despite the protestations of shadow communications minister Malcolm Turnbull, who dubbed the satellites the “Rolls Royce” option, its looks increasingly unlikely that the Coalition will be able to turn back the clock on this one post-election. One potential scenario that could work in the Coalition's favour is if the ITU delays or refuses to give the approval for the parking slots. This would in turn delay the construction of the satellites and open the door for the Coalition to seek alternate options.

However, renegotiating the satellite contracts is probably the least of Turnbull's worries if the rumblings from Telstra are anything to go by. Renegotiations with Telstra lie at the heart of how quickly the Coalition can get its alternative up and running and it should be under no illusions as to how intransigent the telco will be to relinquish its advantage.

The kerfuffle started this week after David Thodey told The Australian at the Mobile World Congress, that Telstra was not open to renegotiating the $11 billion NBN deal with the Coalition. The Australian Financial Review now reports that Telstra is actively working on contingency plans to adequately prepare itself for potential changes stemming from a Labor defeat.

Despite the alarmist tone of the stories, particularly the one in The Australian, none of this should come as a surprise to anyone, especially Turnbull. 

Telstra's primary objective is to preserve shareholder value and squeeze every last bit of value from its copper network. Given the hard work put in by Thodey and his team, there is absolutely no way Telstra will accept anything less from the Coalition, when it comes to compensation.  Here's what Thodey told The Australian:

We have a contract with the government and we know what value we need to participate. And that's really the end of the story. In terms of the value of our shareholders agreed to receive from the government and NBN Co, the deal has not changed.

Speaking on behalf of the shareholders, if there is a different way to make up that value, we are happy to talk about it. But at the end of the day we are making available for a price this infrastructure to allow the government to implement this policy.

Telstra is, for obvious reasons, happy to hammer out a new deal with the Coalition, but Thodey has made it quite clear that it will enter the negotiations with a strong hand.  

All eyes on ALDI

Meanwhile, Kogan.com's foray into the world of virtual mobile operators has evidently struck a chord with the German supermarket chain Aldi which is about to become Australia's latest low cost, pre-paid mobile virtual network operator (MVNO).

The big reveal is set for March 6 but the service reportedly consists of two pay as you go base level plans, $15 and $30, a $35 unlimited set of plan that comes with 5GB of data, and a 2GB data only plan that comes with a 30 day expiry.

ALDI has taken a leaf out of Kogan's playbook by latching onto Telstra's 3G wholesale service, a network that Telstra has been reluctant to open up until now. With its focus now shifting to 4G, it looks like Telstra is keen to open this network especially as its budget broadband plans take form.

Until the Adam Internet deal is worked out by the regulator it looks like Telstra is willing to give access to resellers and make life a touch harder for Optus. Reselling Telstra could well be the fashion this year in an increasingly competitive and congested MVNO market. By the way, ALDI isn't exactly a novice to the space and according to AusDroid, runs similar services in Europe - Aldi Talk in Germany, Belgium and the Netherlands, and Aldi Suisse Mobile in Switzerland. 

Michael Hill takes a shine to Teradata DCM

International jeweller Michael Hill has selected data warehousing outfit Teradata's Demand Chain Management (DCM) application and associated Professional Services to form the core of its supply chain operations. Teradata DCM will be utilised to provide efficient forecasting and product replenishment services to facilitate seamless processing between Michael Hill's manufacturing warehouse and suppliers into its stores globally. 

Michael Hill's group merchandise executive Galina Hirtzel said the DCM integration will support a number of key initiatives planned over the coming years.

 “By using DCM we can automate more of our processes, improving inventory effectiveness and increasing sales by proactively adjusting to changes in consumer demand,” Ms Hirtzel said.

Onwards and upwards for DesignCrowd

Australian online graphic design marketplace, DesignCrowd, has doubled in size with over 100,000 designers on its books. According to the start-up, crowdsourcing fever is showing no signs of slowing down with designer demand for crowdsourcing doubling in the last 12 months. Small businesses demand is also booming with 50 per cent growth in posted projects already in 2013.

Appointments

In appointment news, Twitter has recruited Jonathan Simpson, the former social media strategist at the AFL, to forge stronger sports partnerships. The company also recently appointed Thrive as its local PR agency. 

Zendesk has a new ANZ sales director with Gavin Muldoon coming on board. Meanwhile, cloud-based contact centre technology provider, IPscape, has appointed Bryan Ries as the new VP Sales Australia.

Lenovo ANZ's vice president and regional general manager Alan Munro is moving on to other pastures. Munro will relinquish his position on March 31 with current executive director and transactional business leader, Matt Codrington, stepping into the role of acting regional manager.