Australia | Nov 15 2006
By Rudi Filapek-Vandyck
Competition in Australia’s telecommunication services sector is about to heat up further with Vodafone Australia looking to abandon its “mobile services only” strategy.
FNArena News has received conformation that local management of Vodafone Australia is seeking to acquire assets in Australia that would allow it to offer bundled services similar to what competitors such as Telstra (TLS) and Optus (SGT) have been offering their customers for a few years now.
The switch in strategy follows hot on the heels of the acquisition of New Zealand based internet service provider iHug from embattled Perth-headquartered ISP iiNet (IIN) a few weeks ago. As with the UK parent company, Vodafone’s moves in markets such as the UK, Italy and Germany, management in Australian is primarily focused on making its entrance into the local fixed internet broadband market.
According to our sources, Vodafone Australia would like to add both fixed line telephony services as well as broadband internet to its current mobile offering. Industry sources believe a prime candidate to be acquired by the company is unlisted Primus Australia. It is believed Primus Australia’s US parent would be willing to sell the asset if a buyer comes along and offers the “right price”. Vodafone Australia could be such a buyer.
The thesis of Vodafone Australia possibly buying Primus Australia was also put forward in a research report by JP Morgan analyst Laurent Horrut this morning. Independently from our sources, and solely working on the theoretical premise that if Vodafone Australia would like to copy the change in strategy by the parent company into the Australian market, then Horrut believes Primus Australia could be a potential takeover target for the company.
According to Horrut, Primus Australia has revenues in excess of $400m per annum but these are declining due to acceleration of fixed mobile substitution as well as the migration from dial-up to broadband among its customers. The JP Morgan analyst also reports parent Primus Telecommunications Inc has already acknowledged it has been approached regarding a sale of its Australian subsidiary in a telephone conference with securities analysts.