Australia - Telco Company Profiles - 2nd Tier

Paul Budde Communication Pty Ltd, October 2012, Pages: 135

In this report we provide an overview of the 2nd tier companies, including analysis by BuddeComm, with facts and figures on the company operations in tabular and easy-to-read chart formats.

Increased competition expected from OTTs

The second-tier market is making gains in broadband and they are stepping up IPTV and other OTT activities which will then be bundled into their other product offerings. Although the bundled market often sees overall revenues fall but it generally maintains a higher ARPU. Also in 2013 further consolidation is expected.

While the fixed-voice market revenue declines in the second-tier market so too are mobile and broadband revenues. Falling revenue reflects increased bundle value as well as consumers moving away from fixed-voice services, it is also be a symptom of increased reliance on OTT platforms for both voice and messaging – and in particular the latter. Nevertheless, overall revenues in second-tier mobile services and data services (including internet access) continue to show growth. This is based on increased use of mobile broadband and people moving to higher-speed broadband packages.

It has become clear that OTT is ‘the new normal' for the telecoms industry - with the emerging all-IP networks; telecoms services are basically moving to new business models. These services are seen as a threat by the traditional telcos and the companies offering them are perceived to be getting a free lunch over their networks. This report explores and analyses opportunities and the threats of the various trends and developments in the telecommunications market to the sector and the industry transformation BuddeComm believes is required for the future.

In this report we provide an overview of some of the larger 2nd-tier market players with key revenue figures for the market with brief financial and operational overview on the companies with analysis and data provided in several formats including easy-to-read charts and tables. Developments in this market have been dominated by industry consolidation, a process that is set to continue over coming years. Moving towards a structurally separated regulatory environment with a NBN at the horizon, size does matter. The other important development has been Telstra's aggressive activities to increase their market shares and this has been hurting the 2nd tier market. This is clearly reflected in this year data, total revenues are under $3 billion, well under 10% of the total telecoms market in Australia. This again shows the dominance of in particular Telstra. This year we have left Vodafone out of the 2nd tier market segment, but for comparison reasons there are still references to them.

The NBN, and in particular the structural separation between infrastructure and services, is going to change the telecoms industry beyond recognition. Gone will be the days of regulatory gaming. A completely new industry structure will require collaboration and cooperation, rather than the destructive adversarial environment of the past.

There are still some serious issues that need to be resolved. Are the current government policies conducive to achieving the affordable outcome that is necessary? The first signs are promising. The other question is whether the design of the NBN will lead to true wholesale competition; or will it restrict this to a handful of players who can afford to build their presence in the 121 points of interconnect?

The ACCC has already indicated that this will be one of the main areas it will be monitoring. The unique construction that offers backhaul competition could indeed be the facilitator in obtaining the competitive outcome needed to ensure that a dynamic system is developed which will lead to innovation.

Industry collaboration will also be needed to limit the necessity for more regulation. In a dynamic environment time is money and there is no longer room for year-long regulatory processes. Trust needs to be built up to facilitate much speedier dispute resolution, preferably preventing these disputes from arising in the first place. Some early indications are that NBN Co is willing to sit down and make changes where it makes sense to create a better wholesale and retail environment for all involved.

1. Analysis, Revenue and Market Shares as the 2nd Tier Market moves into 2013
1.1 Telecoms a vibrant and changing industry
1.2 Business models for telcos in an OTT world
1.2.1 The changing nature of the network market
1.2.2 Networks critical for social and economic development
1.2.3 Higher level values are moving elsewhere
1.2.4 Where are the opportunities for the telcos?
1.3 The National Broadband Network
1.3.1 The business opportunities of the POIs
1.3.2 The NBN and the opportunity for ‘virtual' players
1.4 Digital Media
1.4.1 IPTV slow but steady progress
1.4.2 Smart connected TVs and online streaming
1.5 Value added infrastructure services
1.5.1 Do we need infrastructure-based competition?
1.5.2 Shifting clouds
1.5.3 The IT complexity of cloud computing
1.5.4 M2M growth market for the industry
1.5.5 The compelling business of M2M and Big Data
1.6 Mobile market - infrastructure running out of steam
1.6.1 Capacity requirements will be 1000x by 2020
1.6.2 Fixed Mobile Conversion (FMC)
1.6.3 Small cell networks
1.6.4 Heterogeneous networks
1.6.5 Muddling along
1.6.6 Mobile competition starts to bite in Australia
1.6.7 Is network sharing the answer
1.7 Service revenues and market shares
1.7.1 Total market by major service
1.7.2 Total market by major players
2. National Broadband Network

2.1 Wholsale and Competition
2.1.1 Telco industry remains under pressure
2.1.2 National Broadband Network – Policies and Regulations
2.1.3 Wholesale Product Overview
2.1.4 The NBN wholesale and PoI debate
2.1.5 NBN Co's multicast service
2.1.6 Pricing Strategies
2.1.7 NBN Utility Management service – The Retail Clause
2.1.8 Do we need infrastructure-based competition?

3. Amcom Telecommunications Limited
3.1 Company information
3.1.1 Overview
3.2 Company analysis
3.2.1 Well defined strategies
3.2.2 Independence from others
3.2.3 National broadband network (NBN)
3.3 Financial results
3.3.1 Year 2012
3.3.2 Financial statistics
3.3.3 Year 2011
3.4 Products and services
3.4.1 Divisional overview
3.4.2 Amnet division
3.4.3 Business Services division
3.4.4 Data services
3.5 Network
3.5.1 Fibre network overview
3.5.2 SABRENet and maintenance agreement
3.6 Acquisitions, alliances and subsidiary companies
3.6.1 Acquisition overview
3.6.2 Amcom acquires IP Systems (IPS)
3.6.3 Amcom acquires L7 IT group
3.6.4 Partnership with BlueFire cloud services
3.6.5 Subsidiary companies
3.7 Company history
3.7.1 Brief timeline – 1988 - 2012

4. iiNet
4.1 Company information
4.1.1 Overview
4.1.2 Current issues
4.2 Financial results
4.2.1 Year 2012
4.2.2 Year 2011
4.3 Operating results
4.3.1 Subscriber statistics
4.4 Company analysis
4.5 Network
4.5.1 Overview
4.5.2 DSLAM rollout
4.5.3 Dark fibre
4.5.4 Fibre-to-the-Home (FttH)
4.5.5 iiNet's plans for undersea network expansion taking shape
4.6 Acquisitions, alliances and subsidiary companies
4.6.1 Acquisition overview
4.6.2 Partnership with Polycom
4.6.3 Acquisition of ISP Westnet
4.6.4 Alliance with FOX Sports
4.6.5 Alliance with Hypernia
4.6.6 Alliance with Hybrid Television Services
4.6.7 Alliance with Hutchison
4.6.8 Amcom and PowerTel acquire stake in iiNet
4.6.9 Partnership with FetchTV
4.6.10 Acquisition of AAPT Consumer Division
4.6.11 Acquisition of Supernerd
4.6.12 Acquisition of TransACT
4.6.13 Acquisition of Internode
4.7 Products and services
4.7.1 Home and SOHO
4.7.2 Business
4.7.3 Reselling agreements
4.8 Company history
4.8.1 Brief timeline – 1993 - 2012

5. Macquarie Telecom
5.1 Company information
5.1.1 Overview
5.2 Financial results
5.2.1 FY 2012
5.2.2 FY 2011
5.3 Company Analysis
5.3.1 Leader in managed business services
5.3.2 National Broadband Network (NBN)
5.4 Data network
5.4.1 Metro Access Network (MAN)
5.4.2 Mobile network
5.5 Services
5.5.1 Hosting solutions
5.5.2 Data solutions
5.5.3 Voice solutions
5.5.4 Mobile solutions
5.5.5 Management tools
5.5.6 Data centres
5.5.7 Macquarie Telecom Enterprise Cloud
5.6 Company history
5.6.1 Brief timeline – 1992 - 2012

6. M2 Telecommunications
6.1 Company information
6.1.1 Overview
6.2 Company analysis
6.2.1 Growing the company
6.2.2 Arriving in the top ten
6.3 Financial results
6.3.1 Year 2012
6.3.2 Financial statistics
6.3.3 Year 2011
6.4 Services
6.4.1 Fixed-line voice
6.4.2 Mobile
6.4.3 Internet
6.4.4 Brands
6.5 Products and services
6.5.1 Overview
6.5.2 M2 Telecom (retail)
6.5.3 M2 Wholesale
6.6 Acquisitions, alliances and subsidiary companies
6.6.1 Acquisition overview
6.6.2 Acquisition Primus Telecommunications – 2012
6.6.3 Acquisition Time Group – 2012
6.6.4 Acquisition of Flextalk – 2012
6.6.5 Acquisition of AUSTAR Mobile – 2011
6.6.6 Acquisition of Clear Telecoms (M2 Clear) – 2011
6.6.7 Acquisition of Bell Networks – 2010
6.6.8 Acquisition of Clever Communications – 2010
6.6.9 Acquisition of People telecom – 2009
6.6.10 Acquisition of Commander assets – 2009
6.6.11 Acquisition of Unitel Australia – 2008
6.6.12 Acquisition of Orion Telecom – 2007
6.6.13 Acquisition of Tenex Communications – 2007
6.6.14 Acquisition of Wholesale Communications – 2007
6.6.15 VoIP alliance with engine
6.7 Company history
6.7.1 Brief timeline – 1999 - 2012

7. AAPT
7.1 Company information
7.1.1 Overview
7.1.2 Company structure
7.1.3 Products and services
7.1.4 Customers
7.1.5 Competition
7.2 Company analysis
7.3 Network information
7.3.1 Transmission infrastructure
7.4 National Broadband Network
7.4.1 Network certified
7.4.2 Wholesale services
7.4.3 Trial sites
7.4.4 Sale of spectrum to NBN Co
7.5 Financial results
7.5.1 Financial results 2012
7.5.2 Financial results H1 2012
7.6 Company history
7.6.1 Brief timeline – 1990 - 2012

8. Nextgen Networks Pty Limited
8.1 Company information
8.1.1 Overview
8.1.2 Background information on company ownership
8.1.3 Recent developments
8.2 NBN - Regional Backbone Blackspots Program (RBBP)
8.2.1 Background information
8.3 Network
8.3.1 Overview
8.4 Products and services
8.4.1 Introduction
8.4.2 High-speed internet
8.4.3 Transmission
8.4.4 Data centres
8.4.5 Customised data solutions
8.5 Acquisitions and alliances
8.5.1 Nextgen acquires Silk telecom (Silk)
8.6 Company history
8.6.1 Brief timeline – 2000 - 2012

9. TPG Telecom
9.1 Company information
9.1.1 Overview
9.2 Company analysis
9.3 Latest developments
9.3.1 TPG offers low cost mobile broadband
9.3.2 TPG moves withTrustedCloud
9.4 Company divisional overview
9.4.1 Company structure
9.5 Network
9.5.1 Overview
9.5.2 PIPE Networks
9.6 Financial results
9.6.1 Year ending July 2012
9.6.2 Half year
9.6.3 Financial statistical overview
9.6.4 Year ending July 2011
9.6.5 Operational results
9.6.6 Operational statistical overview
9.7 Products and services
9.7.1 Residential services
9.7.2 Business and wholesale services
9.8 Company history
9.8.1 Brief timeline – 1999 - 2012

10. Glossary of Abbreviations

Table 1 – Estimated selected second-tier telco revenues by service – 2010 - 2012
Table 2 – Selected second-tier telco revenues by service – annual change – 2010 - 2012
Table 3 – Estimated selected second-tier telco revenues by service – 2003 - 2009
Table 4 – Selected second-tier telco revenues by service – annual change – 2004 - 2009
Table 5 – Second-tier telcos – revenue by provider – 2009 - 2012
Table 6 – Second-tier telcos – revenue by major provider – annual change – 2009 - 2012
Table 7 – Second-tier telcos – revenue by major provider – relative market shares – 2009 - 2012
Table 8 – Second-tier telcos – revenue by provider (historic) – 2004 - 2007
Table 9 – Second-tier telcos – revenue by major provider (historic) – relative market shares – 2004 - 2007
Table 10 – NBN pricing schedule for access virtual circuits
Table 11 – NBN pricing schedule for PoI connections
Table 12 – Amcom – operating revenue – 2000 - 2012
Table 13 – Amcom – key financial indicators – 2010 - 2012
Table 14 – Amcom – revenue by service division – 2004 - 2012
Table 15 – Amcom's acquisitions – 2001 - 2012
Table 16 – iiNet total revenue – 2004 - 2012
Table 17 – iiNet key financial statistics – 2007 - 2012
Table 18 – iiNet ARPU by type – 2008 - 2012
Table 19 – iiNet key financial indicators – H1 2007 - H1 2012
Table 20 – iiNet total revenue (historic) – 1997 - 2003
Table 21 – iiNet active subscribers – 1997 - 2012
Table 22 – iiNet internet subscribers by type – 2007 - 2012
Table 23 – iiNet voice subscribers by type – 2007 - 2012
Table 24 – iiNet DSLAM exchanges – 2009; 2011 - 2012
Table 25 – iiNet's acquisitions – 2003 - 2011
Table 26 – Internode ADSL2+ statistical overview – 2006 - 2012
Table 27 – Macquarie key financial indicators – 2008 - 2012
Table 28 – Macquarie – services revenue – 1999 - 2012
Table 29 – Macquarie – annual revenue by division – 2004 - 2012
Table 30 – Macquarie – annual change in revenue by division – 2005 - 2012
Table 31 – Macquarie – revenue contribution by division – 2004 - 2012
Table 32 – M2 revenue makeup and annual change – 2004 - 2013
Table 33 – M2 key financial parameters – 2010 - 2012
Table 34 – M2 key financial performance indicators – 2004 - 2013
Table 35 – M2's acquisitions – 2005 - 2012
Table 36 – AAPT revenues by service type – 2008 - 2012
Table 37 – AAPT operating expenses by type – 2008 - 2012
Table 38 – AAPT key performance operating financial information – H1 2011 - H1 2012
Table 39 – AAPT operating expense financial information – H1 2011 - H1 2012
Table 40 – TPG revenue and annual change – 2007 - 2012
Table 41 – TPG – key financial indicators – 2007 - 2012
Table 42 – TPG – opex versus capex – 2007 - 2012
Table 43 – TPG – revenue breakdown by market segment – 2010 - 2012
Table 44 – TPG – revenue breakdown by division – 2009 - 2012
Table 45 – TPG – broadband ARPU – 2009 - 2012
Table 46 – TPG – broadband subscribers on/off-net and bundled – 2008 - 2012
Table 47 – TPG on-net versus Soul off-net home phone subscribers & annual change – 2009 - 2012
Table 48 – TPG versus Soul mobile subscribers and annual change – 2008 - 2012
Table 49 – TPG Telecom – revenue overview (historical) – 2001 - 2007

Chart 1 – Overview of selected second-tier telco revenues by service – 2010 - 2012
Chart 2 – Overview of selected second-tier telcos – revenue – 2010 - 2012
Chart 3 – Overview of long term share trending Amcom – 2001 - 2012
Chart 4 – Overview of Share price trending Amcom – 2011 - 2012
Chart 5 – Overview of Amcom revenue – 2000 - 2012
Chart 6 – Overview of Amcom – key financial indicators – 2010 - 2012
Chart 7 – Overview of Amcom – revenue by service division – 2009 - 2012
Chart 8 – Overview of long term share trending iiNet – 2003 - 2012
Chart 9 – Overview of share price trending iiNet – 2011 - 2012
Chart 10 – Overview of iiNet revenue and annual change – 2004 - 2012
Chart 11 – Overview of iiNet key financial statistics – 2004 - 2012
Chart 12 – Overview of iiNet monthly ARPU by service – 2009 - 2012
Chart 13 – Overview of iiNet internet subscribers by type – 2007 - 2012
Chart 14 – Overview of iiNet voice subscribers by type – 2007 - 2012
Chart 15 – Overview of long term share trending Macquarie Telecom (MAQ) – 2003 - 2012
Chart 16 – Overview of share price trending Macquarie Telecom (MAQ) – 2011 - 2012
Chart 17 – Overview of Macquarie key performance financial indicators – 2007 - 2012
Chart 18 – Overview of Macquarie annual revenue by division – 2005 - 2012
Chart 19 – Overview of Macquarie annual change in revenue by division – 2005 - 2012
Chart 20 – Overview of Macquarie revenue share by division – 2012
Chart 21 – Overview of long term M2 share price trending – 2007 - 2012
Chart 22 – Overview of M2 share price trending – 2011 - 2012
Chart 23 – Overview of M2 revenue makeup and annual change – 2007 - 2012
Chart 24 – Overview of M2 key financial performance indicators – 2007 - 2013
Chart 25 – Overview of AAPT income by service type – 2006 - 2012
Chart 26 – Overview of AAPT expense type – 2006 -2012
Chart 27 – Overview of key performance financial information – H1 2011 - H1 2012
Chart 28 – Overview of TPG share price trending – 2011 - 2012
Chart 29 – Overview of TPG long term share price trending – 2007 - 2012
Chart 30 – Overview of TPG key financial indicators – 2007 - 2012
Chart 31 – Overview of TPG segment revenue by market share – 2012
Chart 32 – Overview of TPG on-net versus off-net broadband subscribers – 2007 - 2012
Chart 33 – Overview of Soul versus TPG mobile subscribers – 2008 - 2012

Exhibit 1 – Amcom Telecommunications Limited (Amcom) at a glance – 2012
Exhibit 2 – Amcom – overview of products and services by division
Exhibit 3 – Subsidiary companies – 2011
Exhibit 4 – iiNet Limited (iiNet) at a glance – 2012
Exhibit 5 – TransACT Communications Pty Ltd (TransACT) at a glance – 2011
Exhibit 6 – Network FttK coverage
Exhibit 7 – Broadband ISPs over TransACT network
Exhibit 8 – TransACT brief company history
Exhibit 9 – Internode Pty Limited (Internode) at a glance – 2012
Exhibit 10 – Internode brief company history
Exhibit 11 – Macquarie Telecom (Macquarie) at a glance – 2012
Exhibit 12 – Macquarie Telecom data network PoPs
Exhibit 13 – M2 Telecommunications Group Limited (M2) at a glance – 2012
Exhibit 14 – M2 services and target market by brand – 2012
Exhibit 15 – Primus Telecommunications Australia at a glance – 2011
Exhibit 16 – Primus brief company history
Exhibit 17 – AAPT at a glance – 2012
Exhibit 18 – Nextgen Networks Pty Limited (Nextgen) at a glance – 2012
Exhibit 19 – An overview of the blackspots program rollout
Exhibit 20 – The Regional Backbone Blackspots Program – completed rollout figures – 2011
Exhibit 21 – Nextgen network distances and construction dates
Exhibit 22 – TPG Telecom Limited (TPG) at a glance – including key results – 2012
Exhibit 23 – TPG Telecom – entities within the group
Exhibit 24 – Background information on Soul Pattinson Telecommunications (Soul)

- AAPT
- Amcom Telecommunications Limited
- iiNet Limited (Including Internode
- TransAct)
- Macquarie Telecom
- M2 Telecommunications (Including Primus Communications)
- Nextgen Networks Pty Limited
- TPG Telecom Limited (Including PIPE Networks)

Information on Telstra, Optus and Vodafone are covered in a separate report: Australia - Telco Company Profiles - Telstra, Optus and Vodafone.

Also available

• Australia - Telco Company Profiles - Telstra, Optus and Vodafone

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