[AusNOG] AAPT set to buy Nextep (from Commsday)

[Skeeve Stevens]

Hey all,

Interesting news from Commsday.

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*AAPT set to snap up Nextep assets *
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AAPT is believed to be on the brink of buying up the infrastructure assets
of NEC Australia’s Nextep arm, a deal that would see both parties reap
significant benefits.

CommsDay has learned that NEC Australia has been exploring the possibility
of divesting its wholesale service provider division for weeks if not
months, with an announcement now imminent. The sale of Nextep to AAPT would
allow NEC to focus on its core objective of dominating the services space,
while also turbocharging AAPT’s ongoing infrastructure expansion and
national wholesale broadband strategy.

Nextep commands extensive infrastructure holdings; these include more than
90 metro DSLAMs, plus 62 new regional DSLAMs that it rolled out last year
along the Regional Backbone Blackspots Programme route. However, Nextep’s
negotiations with potential wholesale customers in the relevant areas hit a
hurdle when a Telstra wholesale DSL service rezoning eliminated most of
the price advantage Nextep would have offered. Other factors, including the
ongoing Australian Competition and Consumer Commission review into
wholesale DSL regulation, added further challenges.

By March this year, Nextep was exploring its options as a potential
wholesale aggregator of NBN services, while still talking with ISPs and
other potential users of its existing DSLAM infrastructure – though by that
stage, GM Mark Grooby had said that it was unlikely to consider further
infrastructure investment. And not long thereafter, the firm began to look
at other possibilities; CommsDay understands that the prospect of a sale
has been on the table for the last couple of months.

“NEC Australia [has been] carrying out a market sounding to investigate
potential opportunities for the Nextep business, including alliances,
acquisitions and/or divestment in line with the company strategy,” said the
firm. “Employee and customer interests will be priorities with regards to
any possible decisions on Nextep’s future.”

Now, though, it’s understood that a deal is imminent, with AAPT lined up as
the buyer. The acquisition would be a good fit for the telco; it’s been
building out its own exchanges to broaden its reach over the last few
months, and Nextep’s infrastructure would substantially accelerate that
process. That dramatic bump in network coverage would also strengthen some
of AAPT’s key services growth areas, such as its national wholesale
broadband strategy – currently operating via a blend of Telstra and AAPT’s
own network assets, and primed to leverage NBN footprint as it becomes
available.

NEC Australia, meanwhile, outlined a strong focus on cloud and other
services earlier in the year, reinforced by the news in late May that it
would buy the technology solutions business of ICT firm CSG Limited in a
A$277 million deal that would more than double NEC’s local workforce. MD
Alan Hyde is intent on making the firm one of Australia’s top five ICT
companies, and exiting the wholesale DSL market would help NEC concentrate
its resources on that objective - with the sale also giving it capital
against potential future acquisitions, for which Hyde has said he’s “still
got an appetite.”

Petroc Wilton
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*Skeeve Stevens, CEO - *eintellego Pty Ltd
skeeve at eintellego.net ; www.eintellego.net

Phone: 1300 753 383; Cell +61 (0)414 753 383 ; skype://skeeve

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twitter.com/networkceoau ; blog: www.network-ceo.net

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