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Australia - Telco Company Profiles - 2nd Tier


Attention: There is an updated edition available for this report.

This annual publication provides detailed overviews, statistics and objective analysis on all aspects of the second-tier market. It provides essential reading and gives in-depth information on:

  • Company overviews and structure of the following: AAPT, Amcom, gotalk, iiNet, Internode, Macquarie Telecom, M2 Telecommunications, Nextgen Networks, TPG Telecom, TransACT, and Vodafone Hutchinson Australia (VHA);
  • Major divisions and subsidiaries;
  • Financial and operating statistics;
  • Marketing and financial analyses and strategic overviews;
  • Network overviews.Information on Telstra and Optus is covered in a separate report at www.budde.com.au: Australia - Telco Company Profiles - Telstra and Optus


2nd tier telcos at the NBN crossroad

The telecommunications market in Australia is dominated by three firms, Telstra, SingTel Optus and VHA (Vodafone); however it includes a large number of second-tier firms, some of these being large in their own right. Many second-tier companies provide access to fixed line and mobile voice services, as well as Internet access via fixed line or wireless technologies.

The second-tier market is competitively vibrant and offers a very diverse range of products. Price competition is also enhanced by the presence in the industry of many smaller resellers and network operators.

Revenues in second-tier mobile services and data services (including Internet access) continue to show satisfactory growth. However, the fixed voice market is declining in the second-tier market at an even faster rate than it is in the first-tier market - it fell by more than 11% in 2008/09, and more than 8% in 2009/10.

AAPT

AAPT is one of the larger telecommunications carriers in Australia, offering local, national and international voice, data, mobile and Internet services to business, corporate and government customers. AAPT is a wholly-owned subsidiary of Telecom New Zealand and is one of only three Australian telecommunication providers to own and operate its own national voice and data network.

AAPT has a long history of business problems and after years of trying to sell the company, or parts thereof, in 2010 it was finally able to sell its residential business to iiNet. Telecom New Zealand acquired PowerTel, and both AAPT and PowerTel were combined under the same operating structure. However, it is the PowerTel component that is still core to the current business. Its on-net strategy is centred on leveraging proprietary network infrastructure to improve underlying economics. AAPT’s high-bandwidth fibre optic backbone links PoPs located in state capitals and regional centres, providing coverage to 98% of Australia. AAPT interconnects with Telstra in major exchanges to supplement its backbone infrastructure, and for last-mile access to customers. In major cities and metropolitan areas AAPT delivers fibre optic cable to buildings of high-volume customers; broadband wireless LMDS to corporate and government users; and DSL to SMEs.

Amcom Telecommunications Limited

Amcom is a second-tier telecommunications carrier providing fibre, DSL broadband, data centres, IP voice solutions and Internet services to the corporate, wholesale, government and SME markets. Amcom is one of the best-placed telcos in the Australian market, with excellent prospects for future growth, and it remains a well-managed and focused business.

Based in Western Australia, Amcom has constructed over 1,900km of high-speed fibre optic networks in Perth, Darwin, Alice Springs and Adelaide, accessing over 1,200 buildings. The network provides access to around 80% of business premises in those cities. Amcom has completed a DSLAM network rollout of 37 exchanges in Perth and Adelaide that capitalises on its existing fibre network. It has acquired a 23.4% stake in iiNet.

Amcom claims that its recent revenue growth is a product of its fibre investments, driven by growing demand for high-speed data services. Earnings growth is expected to continue in 2011 on the back of buoyant market conditions.

gotalk

gotalk is a full-service telecommunications company with operations in Australia and New Zealand and sales in excess of $125 million per annum. Since its establishment in 2000, the company has grown steadily through acquisitions and the creation of new products. Prepaid products include the new gotalk prepaid mobile, prepaid wireless broadband, international phonecards and ezichat prepaid landline.

iiNet Limited

iiNet was established in 1993 and listed on the ASX in 1999, growing from a small Perth business into the third largest Internet service provider in Australia, at which time the company provided 750,000 broadband, telephony and dial-up services nationwide.

As part of iiNet’s goal to lead the market with the best Internet access products the company acquired Victoria-based Netspace for $40 million in March 2010. The company already had its own high-speed ADSL2+ network reaching around four million households across Australia; and it has the largest VoIP network in the country. The purchase cemented iiNet’s position as Australia’s third largest fixed-line retail broadband provider, with 540,000 DSL connections. That places it just ahead of Soul-TPG (490,000) and behind tier-one telcos Optus (1 million) and Telstra (2.2 million). With the NBN moving full steam ahead the company has indicated it is planning network expansions to further increase its customer base.

Internode

Internode is an Australian-owned national ISP, which provides fixed-line broadband, wireless DSL, WiFi, dial-up, 3G wireless broadband, Voice over Internet Protocol and ethernet services across Australia. Internode’s services utilise the Agile International network, a tier-one IP network with more than 15.5Gb/s of international data capacity linking Australia to the Internet globally. Internode maintains overseas points-of-presence in San Jose, Los Angeles and Ashburn in the USA, and Tokyo, Hong Kong, Singapore, Auckland and London. In early 2005 the company launched the country’s first ADSL2+ network and, through its subsidiary Agile Communications, it now operates around 190 DSLAMs.

In this report BuddeComm overviews Internode and outlines the developing regional broadband infrastructure and services that the company provides, including broadband services to areas such as Port Pirie, the Riverland, Murray Bridge, Port Augusta, Stirling North, the Coorong and the Yorke Peninsula.

Internode uses alternative broadband platforms such as regional WiMAX networks and metropolitan WiFi hotspots. Strong growth is reported in the naked ADSL product line.

In 2009 Internode launched fibre-to-the-home at greenfield housing developments, delivering 100Mb/s residential services for less than $100 per month. BuddeComm also outlines newer developments, including Internode’s entry into the mobile broadband market, a commercial content delivery network for the distribution of media content, and a commercial relationship with TiVo.

Macquarie Telecom

Macquarie Telecom delivers a full range of hosting, data, voice and mobile services specifically to the business and government market.

Established in 1992, Macquarie Telecom is one of the first telecommunication providers of the deregulated era and successfully publicly listed on the Australian Securities Exchange in October 1999. Macquarie’s two key target markets are Australian mid-sized corporates and the government sector, where it services over 2,000 customers.

The company remains focused on delivering shareholder returns through growth of its two core businesses: hosting and telco. The hosting business is a key growth platform and Macquarie Telecom will continue to pursue its strategy of enhancing its market leadership position through growth in market share. The telco business will remain a core offering of Macquarie Telecom and the company continues to focus on customer service and growing its corporate client base.

Macquarie Telecom’s Metro Access Network supports voice, data, VoIP, DSL and Internet applications. Hosting and data are a large focus of Macquarie’s strategy and its data centre is becoming increasingly important. In 2010 voice revenues continued to fall, reaching the same level as data and hosting.

M2 Telecommunications

Established in 1999 and listed on the ASX in 2004, M2 Telecommunications Group (M2) is Australia’s largest network independent provider of fixed-line, mobile and data telecommunications services. It also provides fixed-line and 3G mobile services in New Zealand. M2 has shown consistent growth over the eight years up to 2010, through organic growth and strategic acquisitions.

In 2009 M2 acquired People Telecom and the business assets of Commander Communications, both at bargain basement prices. In May 2010 M2 completed the acquisition of selected business assets of Clever Communications Australia and in August 2010 it completed the acquisition of the business assets of Bell Networks Voice and Data.

Nextgen Networks

Nextgen Networks is a telecommunications carrier that specialises in data services for carriers, service providers, government and corporations. Nextgen owns and operates Australia’s third-largest national fibre network of over 8,500km, fibre rings and Co-Lo assets in all capital cities, plus an extensive national virtual private LAN service switched data network.

The fibre network runs between the country’s principal capital cities of Brisbane, Sydney, Melbourne, Adelaide and Perth, and has links to nodes in around 70 regional cities and centres. Nextgen’s national virtual private LAN service, launched in 2006, and Australia’s first, was the first step in moving the company from the initial business plan of focussing on high capacity wholesale to becoming a full data service provider to the broader Australian market.

In 2008 Nextgen acquired the business and assets of Silk Telecom, which substantially enhanced its metro fibre footprint in Victoria, South Australia and Western Australia. In late 2009 Nextgen was awarded a contract to supply the Department of Defence with high-capacity transmission services over a five-year term.

TPG Telecom

TPG Telecom is a provider of IP telecommunications and multimedia services in the Australian marketplace. Services including voice, Internet and data solutions are provided to a customer base ranging from the consumer market through to small and medium enterprises, corporate and government sectors.

The company has the largest data network and voice network after Telstra; the largest fully-converged voice, video and data IP-based access network in regional Australia; and the largest voice-enabled IP network. IPTV is included with ADSL2 packages and is available at most TPG exchanges throughout Australia. The IPTV trials are looking at a pay TV-type model based on content for niche markets.

In early 2008 Soul formally acquired ISP TPG, but who is really in charge became obvious when the company name was changed in late 2009 to TPG Telecom. In addition, Soul formally acquired ISP Chariot in mid-2008. During 2009/10 the company was enabling over 60 new exchanges with the main expansion area being in Western Australia.

In late 2009 TPG launched a merger with dark fibre and submarine cable operator Pipe Networks.

TransACT Communications

TransACT is a Canberra-based, privately owned company that builds and operates high-speed broadband communications infrastructure across the ACT region, including Canberra, Queanbeyan and other surrounding towns in southern NSW. It delivers quadruple-play communications services of voice, high-speed data, subscription TV services and mobile services (via and MVNO with Vodafone).

TransACT’s subscription television service offers a real-time video-on-demand service, a range of content across some 60 channels that includes movies and sporting programs.

TransACT continued with its network extension by provisioning ULL to exchanges where the FttC network did not cover. In 2007 TransACT began rolling out its FttP network in greenfield estates across the ACT region.

In 2008 TransACT Communications acquired Victorian carrier Neighbourhood Cable from TVG. Neighbourhood Cable is an owner and operator of HFC networks in Ballarat, Geelong and Mildura. It delivers similar triple-play communications services, excluding real-time video-on-demand. In 2010 Neighbourhood Cable commenced an upgrade of its network from DOCSIS 2 to DOCSIS 3 which it expects will enable it to deliver 100Mb/s Internet services.

Discussions with NBN Co were still going on in 2010.

Vodafone Hutchison Australia

Vodafone Hutchison Australia (VHA) is the third largest mobile carrier in Australia. It was formed as a 50:50 joint venture in June 2009 following the merger of Vodafone Australia with Hutchison 3G Australia.

Hutchison Whampoa remains the majority shareholder of Hutchison Telecoms, with an 87.9% stake.

VHA owns and operates the mobile brands of Vodafone, 3 and Crazy John’s, and offers a comprehensive suite of prepaid and postpaid mobile voice and data products to both consumer and business customers.

1. Market Overview and Statistics - 2nd Tier Market 2010
1.1 Overview of 2nd tier telecommunications market
1.2 Industry analysis
1.2.1 Introduction
1.2.2 Industry tracking towards a new future
1.2.3 Telstra agreement is setting the scene
1.2.4 Other players will have to follow
1.2.5 Mergers and acquisitions will be on the way
1.2.6 Old model still has some life in it
1.2.7 Penetration, not ARPU, is the key to success
1.3 Major 2nd tier firms
1.3.1 Update on VHA merger - mid-2010
1.3.2 Has Telecom NZ almost sold AAPT?
1.3.3 Analysis of iiNet
1.3.4 M2 continues to grow
1.3.5 Analysis of Macquarie Telecom
1.3.6 Analysis of TPG Telecom
1.3.7 Analysis of TPG/Pipe Merger
1.3.8 Amcom
1.3.9 Dodo
1.4 Service revenues and market shares
1.4.1 Total market by major service
1.4.2 Total market by major players


2. AAPT
2.1 Reorganisation 2010/11
2.1.1 Telecom New Zealand (Telecom NZ) has sort of sold AAP Telecommunications (AAPT)
2.1.2 The new direction
2.2 Company information
2.3 Network information
2.3.1 Overview
2.3.2 National backbone network
2.3.3 National voice switching network
2.3.4 Data and IP network
2.3.5 PowerTel
2.3.6 CBD and metropolitan fibre rings and Fibre-to-the-Building (FttB)
2.3.7 Upgrade of internal IP network
2.3.8 Hosted Voice-over-Internet-Protocol (VoIP)
2.4 Broadband access
2.4.1 Overview
2.4.2 Local Multipoint Distribution Systems (LMDS) wireless infrastructure
2.4.3 DSL network
2.4.4 ADSL2+ broadband network
2.5 International infrastructure
2.6 Company structure
2.6.1 Overview
2.6.2 Gen-i Australia (Gen-i), including realignment with TCNZA
2.7 Financial results
2.7.1 Financial statistics 2010
2.7.2 Financial year 2009
2.8 Company history


3. Amcom Telecommunications Limited
3.1 Company information
3.1.1 Fibre division
3.1.2 Contract with Northern Territory Government
3.1.3 Amnet division
3.2 Financial results
3.2.1 Financial Results for FY2010
3.2.2 Financial results for FY2009
3.3 Company analysis
3.3.1 National Broadband Network (NBN)
3.4 Network
3.4.1 Fibre network overview
3.4.2 SABRENet agreement
3.5 Alliances and acquisitions
3.5.1 Amcom acquires IP Systems (IPS)
3.5.2 People Telecom sells Perth corporate data business to Amcom
3.6 Products and services
3.7 Company history


4. gotalk
4.1 Company overview
4.2 Company activities and milestones
4.3 Financial results
4.3.1 Financial results - 2010
4.4 Company operating statistics
4.4.1 2010
4.4.2 2009
4.4.3 2008
4.5 Company structure
4.5.1 CardCall
4.5.2 gotalk communications


5. iiNet
5.1 Company information
5.1.1 Financial and operating results
5.1.2 Subscriber statistics
5.2 Network and DSLAM rollout
5.2.1 Overview
5.2.2 Dark fibre
5.2.3 Fibre-to-the-Home (FttH)
5.2.4 iiNet’s plans for network expansion
5.3 Acquisitions and alliances
5.3.1 Acquisition of ISP Westnet
5.3.2 Alliance with FOX Sports
5.3.3 Alliance with Hypernia
5.3.4 Alliance with Hybrid Television Services
5.3.5 Alliance with Hutchison
5.3.6 Amcom and PowerTel acquire stake in iiNet
5.3.7 Partnership with FetchTV
5.3.8 Acquisition of AAPT Consumer Division
5.4 Reselling agreements
5.5 Products and services
5.5.1 Home and SOHO
5.5.2 Business
5.6 Company history


6. Internode
6.1 Company overview
6.2 Company analysis - Internode 2010
6.3 Network information
6.3.1 Overview
6.3.2 Domestic fixed network
6.3.3 Regional Australia
6.3.4 International network
6.3.5 WiFi network
6.3.6 Expansion activities
6.4 Operating statistics
6.5 Regional services - state government contracts
6.5.1 Coorong council - ADSL2+ network
6.5.2 Extension of South Australian Government contract
6.5.3 ADSL2+ services in Port Augusta, Yorke Peninsula and Mt Gambier
6.5.4 Solar-powered broadband for Coorong
6.5.5 Fibre services in Port Pirie, Berri and Murray Bridge
6.6 Agile Communications Pty Limited (Agile)
6.6.1 Broadband for Murray towns
6.7 Products and services
6.8 Company history


7. Macquarie Telecom
7.1 Company information
7.2 Financial results
7.2.1 Results for financial year ending 30 June 2010
7.3 Company analysis
7.3.1 National Broadband Network (NBN)
7.3.2 ICT leader
7.4 Data network
7.4.1 Metro Access Network (MAN)
7.4.2 Mobile network
7.4.3 DSLAM rollout for ADSL2+ services
7.5 Services
7.5.1 Hosting solutions
7.5.2 Data solutions
7.5.3 Voice solutions
7.5.4 Mobile solutions
7.5.5 Management tools
7.6 Company history


8. M2 Telecommunications
8.1 Company information
8.2 Financial results
8.3 Services
8.3.1 Fixed-line voice
8.3.2 Mobile
8.3.3 Internet
8.3.4 Brands
8.4 Organisation
8.4.1 Overview
8.4.2 Business Units - M2 Telecom (retail) and M2 Wholesale
8.4.3 Acquisition of Bell Networks - 2010
8.4.4 Acquisition of Clever Communications - 2010
8.4.5 Acquisition of People telecom - 2009
8.4.6 Acquisition of Commander assets - 2009
8.4.7 Acquisition of Unitel Australia - 2008
8.4.8 Acquisition of Orion Telecom - 2007
8.4.9 Acquisition of Tenex Communications - 2007
8.4.10 Acquisition of Wholesale Communications - 2007


9. Nextgen Networks Pty Limited
9.1 Company information
9.1.1 Company ownership
9.1.2 Regional broadband alliances - SP Telemedia
9.2 Recent developments
9.2.1 NewSat signs deal with Nextgen for Kimberley project
9.2.2 Department of Defence (DoD) fibre-optic infrastructure contract
9.3 Acquisitions
9.3.1 Nextgen acquires Silk Telecom (Silk)
9.4 Company analysis
9.4.1 Nextgen rises from the ashes
9.5 Network information
9.5.1 Overview
9.5.2 Network update
9.6 Products and services
9.6.1 Introduction
9.6.2 Point-to-Point (SDH) services
9.6.3 Point-to-Point (ethernet) services
9.6.4 Internet Connect service
9.6.5 Co-Lo services
9.6.6 Customised data solutions
9.6.7 Interoperability Testing Centres
9.7 Company history


10. TPG Telecom
10.1 Company information
10.2 Company structure
10.3 Company divisional overview
10.3.1 Parent company - Washington H Soul Pattinson & Co (WHSP)
10.3.2 Soul Pattinson Telecommunications (Soul)
10.4 Network
10.4.1 Overview
10.5 Operating results
10.5.1 Subscriber statistics
10.6 Financial results
10.6.1 2010
10.6.2 2009
10.6.3 2008
10.7 Products and services
10.7.1 Residential services
10.7.2 Business and wholesale services
10.8 Company history
10.9 Soul historic information
10.9.1 Re-alignments, acquisitions and alliances
10.9.2 Trials IPTV over ADSL2+


11. TransACT Communications Pty Limited
11.1 Company information
11.2 Company analyis
11.2.1 Possible buyout by NBN Co
11.3 Neighbourhood Cable Limited (NCL)
11.4 TransACT network
11.4.1 Overview
11.4.2 Suburban FttP network projects in Canberra
11.4.3 Upgrade to IPTV
11.4.4 FttP launched
11.4.5 Service providers
11.5 Products and services
11.6 Company history


12. Vodafone Hutchison Australia
12.1 Company overview
12.2 Vodafone restructure - a misdirection?
12.3 Financial highlights
12.3.1 Overview
12.3.2 Hutchison Telecommunications (Australia) (HTA) financial highlights for FY2010
12.3.3 Operating highlights for FY2010
12.4 Networks
12.4.1 Background
12.4.2 VHA network
12.4.3 3 network
12.4.4 New network developments from Vodafone


13. Glossary of Abbreviations
Table 1 - Selected second-tier telco revenues by service - 2003 - 2010
Table 2 - Total second-tier telco revenues by service - annual change - 2004 - 2010
Table 3 - Second-tier telcos - revenue by provider - 2004 - 2010
Table 4 - Second-tier telcos - revenue by major provider - annual change - 2004 - 2010
Table 5 - Second-tier telcos - revenue by major provider - relative market shares - 2004 - 2010
Table 6 - AAPT operating expenses and revenues by service - 2006 - 2010
Table 7 - Amcom - operating revenue - 2000 - 2010
Table 8 - Amcom - financial breakdown - 2004 - 2010
Table 9 - gotalk revenue and annual change - 2003 - 2010
Table 10 - iiNet total revenue - 1997 - 2011
Table 11 - iiNet active subscribers - 1997 - 2010
Table 12 - iiNet subscribers - 2007 - 2010
Table 13 - iiNet ARPU by service - June 2010
Table 14 - iiNet DSLAM-enabled exchanges - 2009
Table 15 - iiNet’s acquisitions
Table 16 - Internode DSL statistical overview - 2008 - 2010
Table 17 - Macquarie - services revenue - 1999 - 2010
Table 18 - Macquarie - annual revenue by division - 2004 - 2011
Table 19 - Macquarie - annual revenue growth by division (continuing operations) - 2005 - 2010
Table 20 - Macquarie - revenue contribution by division - 2004 - 2010
Table 21 - M2 financial overview - 2004 - 2010
Table 22 - Soul - broadband subscribers - 2003 - 2011
Table 23 - TPG - broadband subscribers - 2007 - 2010
Table 24 - TPG Telecom - mobile subscribers - 2008 - 2010
Table 25 - TPG Telecom - revenue overview - 2001 - 2011
Table 26 - TPG Telecom - EBITDA and NPAT - 2006 - 2011
Chart 1 - TransACT total subscribers and annual change - 2002 - 2010
Exhibit 1 - AAPT at a glance
Exhibit 2 - AAPT interconnect agreements with international carriers
Exhibit 3 - AAPT international network
Exhibit 4 - Amcom Telecommunications Limited (Amcom) at a glance
Exhibit 5 - Amcom products and services
Exhibit 6 - gotalk Ltd at a glance
Exhibit 7 - gotalk group of companies
Exhibit 8 - gotalk activities and milestones - 2000 - 2010
Exhibit 9 - gotalk prepaid services
Exhibit 10 - iiNet Limited (iiNet) at a glance
Exhibit 11 - Internode Pty Limited (Internode) at a glance
Exhibit 12 - Internode products and services
Exhibit 13 - Macquarie Telecom (Macquarie) at a glance
Exhibit 14 - Macquarie Telecom data network PoPs
Exhibit 15 - M2 Telecommunications Group Limited (M2) at a glance
Exhibit 16 - M2 services by brand - 2010
Exhibit 17 - Nextgen Networks Pty Limited (Nextgen) at a glance
Exhibit 18 - Nextgen’s VPLS network
Exhibit 19 - Nextgen network distances and construction dates
Exhibit 20 - TPG Telecom Limited (TPG) at a glance
Exhibit 21 - TPG Telecom - entities within the group
Exhibit 22 - TransACT Communications Pty Ltd (TransACT) at a glance
Exhibit 23 - TransACT network FttC coverage
Exhibit 24 - Broadband ISPs over TransACT network

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