[AusNOG] TPG vs the World
Shane Short
shane at short.id.au
Fri May 1 01:14:01 EST 2015
I think the competition aspect is sadly only one of the many
considerations (for me, at least). I personally think there's a distinct
difference between competition and competence. As someone who somehow
miraculously was a customer of both Soul and AAPT before TPG acquired
them, I am genuinely at my wits end with both of them being completely
and utterly unable to provide me anything resembling service (billing
disputes, provisioning taking forever, account managers who are
completely uncontactable for days/weeks on end) and by some of the
reports I hear from others, I'm not alone.
It's not bad enough that TPG are attempting to purchase iiNet (and as
much as they state they'll leave it alone, their track record suggests
otherwise), but for them to block Vocus (who I have nothing but
excellent experiences with) from expanding further into my own state
leaves a shit taste in my mouth.
When I look into the future and see TPG, Optus and Telstra as your three
main carriers in this country-- I get scared. *very* scared. As the
market continues to consolidate it's getting more and more difficult to
purchase transit/services, especially for the little guy. I'm sure I
have the conversation with people on a frequent basis "so, who the hell
can I buy transit from" and that list is starting to get smaller and
smaller every day.
So it's all well and good if the three main carriers battle it out and
prices come down, but at what point does quality of service and customer
support start factoring into the equation? Surely that has just as much
of an impact on the customer as "competition".
Bevan Slattery wrote:
> I have to say it’s been a remarkable few days in the industry and
> there is much more to happen ahead. I agree that it isn’t “nice” to
> acquire blocking stakes in companies to thwart your competitors from
> winning the prize. But it isn’t necessarily (and is actually rarely)
> anti-competitive under the law unless you were the monopoly or at
> least had significant market influence. In this case you could expect
> it would be pretty reasonable to argue with the ACCC that NOT letting
> Vocus acquiring Amcom is actually better for competition as there are
> more players in the market, more east coast providers etc.. (Granted I
> can also see the counter to that argument too, being that a stronger
> Amcom/Vocus entity would create a new alternative national provider –
> which I think is more realistic and beneficial for competition).
> Agree it is not “nice” and I sincerely feel for both Amcom and Vocus.
> I particularly feel for the Amcom shareholders who have probably lost
> a tremendous opportunity to exit/merge with Vocus. Share price is
> down 15% today and Vocus haven’t been affected much. Market is a good
> indicator of value shifting here.
>
> But lets keep a bit of perspective…
>
> Just last month Vocus acquired 15% of Macquarie Telecom as a
> “strategic stake” more than likely as a blocking stake/foot on an
> option. Smart move again from Vocus and appreciate there was no deal
> in play, but rumours suggested it was being sized up by multiple parties.
>
>
> http://www.arnnet.com.au/article/572879/vocus-buys-15-million-stake-macquarie-telecom/
>
>
> Vocus’ 15% stops any friendly/compulsory takeover of Macquarie (need
> 90% minimum acceptance). 100% minus Vocus’ 15% is 85% maximum
> acceptance. No can do.
>
> But more interestingly in the case of Macquarie Telecom where the
> founders and major shareholders are on the Board (Directors) and own
> approx 60% of the shares on issue, under the alternative takeover
> process called Scheme of Arrangement (which is what Vocus proposed for
> Amcom and TPG for iiNet) you are required to get 75% of the eligible
> votes on the day of voting – and importantly the Directors of the
> Company cannot vote their shares. With Macquarie Telecom that would
> mean the Tudehope’s vote can’t be counted and therefore there is less
> than 40% of the shares available to be voted on. With Vocus holding
> 15% there can be no takeover via scheme without Vocus’ approval. If
> Vocus vote against any future scheme then the maximum vote possible is
> 70% which is less than the 75% threshold. Therefore Vocus stake in
> Macquarie Telecom acquired last month has the exact same effect as the
> blocking stake now held by TPG in Amcom (actually Vocus and Amcom
> could still theoretically go ahead). It will be difficult for Vocus
> to seriously argue the merits of this without drawing attention to
> their actions a month earlier. The value of hindsight I suppose.
>
> The next thing to watch is what happens in the week with M2 and iiNet.
> Under the Scheme Document TPG will have 4 business days (I think) to
> counter M2’s offer. This will all keep playing out over the next
> week. I think there maybe merit in Vocus/Amcom arguing with the ACCC
> that if TPG do get their hands on iiNet, then as part of their
> approval they should required TPG to dispose of their (or related
> parties) interests in Amcom. TPG will be the second largest player in
> terms of broadband, acquired two (2) domestic/metro fibre networks and
> their stake in Amcom at that point could be argued to be bad enough
> for the ACCC to make it a term of conditional approval (i.e. approved
> subject to disposal). Time will tell and unfortunately the
> iiNet/M2/TPG battle probably won’t be decided until after the upcoming
> Vocus/Amcom vote (unless delayed). If M2 get iiNet, then I think the
> Amcom stake held by TPG will stay.
>
> An interesting wrinkle/concept is that iiNet/M2 (and to some extent
> Vocus/Amcom) have as a possible option is that even if TPG/DT did
> block a deal between in iiNet and M2, there is nothing stopping iiNet
> breaking the offer (except for the lazy $15m in break fees) reversing
> the tables and having a friendly crack at M2 at exactly the same
> transaction with the same value, just that iiNet is the "acquirer" and
> M2 is the “target". This would effectively kill of TPG’s blocking
> stake because shareholder approval by the acquirer is only 50% as long
> as no shareholder in the new merged entity would control more than 20%
> (which I’m pretty sure is the case in both iiNet/M2 and Vocus/Amcom)
> then the deal would proceed. Again the same reverse takeover could
> apply to Vocus/Amcom.
>
> Anyway, there’s some smart operators with some smart advisors and and
> it’s not even half time me thinks.
>
> Cheers
>
> [b]
>
> From: Shane Short <shane at short.id.au <mailto:shane at short.id.au>>
> Date: Thursday, 30 April 2015 3:53 pm
> To: Damian Guppy <the.damo at gmail.com <mailto:the.damo at gmail.com>>
> Cc: "ausnog at lists.ausnog.net <mailto:ausnog at lists.ausnog.net>"
> <ausnog at lists.ausnog.net <mailto:ausnog at lists.ausnog.net>>
> Subject: Re: [AusNOG] TPG vs the World
>
> I think investing in a competitor to stop them being bought by another
> competitor, so you then don't have to compete with them is by
> definition anti-competitive (well it should be by the amount of times
> I said compet*).
> Some analysts have mentioned this might be a shot across the bow to
> iiNet implying "take our deal over M2's, or we'll do this to you and
> block the M2 deal too".
>
> Regardless of the end game, it's clear Teoh's got his shit in a twist
> about something and he's throwing his money around to get his way.
> Hopefully the anti-telstra commission step in and do something useful.
>
> Regarding consolidation in the industry, it's bound to happen, if
> nothing else the POI/CVC charges are going to make it extremely
> difficult for national carriers to offer services everywhere-- but it
> does open another potential avenue; where you have smaller players
> focusing on their own little back yards, buying connections to
> specific POIs inside their market; almost like the dialup days before
> MegaPOP.
>
> -Shane
>
> Damian Guppy wrote:
>> Lets just take TPG, M2, iiNet, Amcom, and Vocus, and merge them all
>> into one giant company. That way we can stop all this fighting. We
>> can take the names of the top two companys (TPG and M2) and combine
>> their names to be T2.
>>
>> Wait....
>>
>> But seriously, it is clear TPG is just blocking the Vocus+Amcom stuff
>> just because they don't want that competition. I wouldn't call it
>> "toys being thrown out of the sandbox" but just very very aggressive
>> corporate dealings by TPG. At some point they are bound to cross the
>> line, and this could be that line. Consolidation in the telco sector
>> is inevitable thanks to the NBN.
>>
>> --Damian
>>
>> On Thu, Apr 30, 2015 at 10:25 AM, Brad Peczka <brad at bradpeczka.com
>> <mailto:brad at bradpeczka.com>> wrote:
>>
>> TPGs campaign to own every customer and strand of fibre in
>> Australia continues, with an announcement from Amcom this morning
>> (http://www.asx.com.au/asxpdf/20150430/pdf/42y7jb0tv5530k.pdf)
>> stating that they intend to refer TPGs actions and purchase of a
>> blocking stake to the ACCC.
>>
>> There was a related article on ITNews
>> (http://www.itnews.com.au/News/403386,tpg-boosts-amcom-stake-to-block-vocus-merger.aspx),
>> in which James from Vocus makes some choice quotes - my personal
>> favourite being "And that's the shame of it, one anti-competitive
>> telco is affecting the value and the future of 9000 mums and
>> dads. It's disgusting really."
>>
>> >From the outside looking in, the whole TPG/Vocus/Amcom thing
>> smacks of toys being thrown out of the sandbox because TPG can't
>> have it all their way. The act of buying shares to block a merger
>> without making a competing offer screams anti-competitive
>> behaviour, though there's no undertaking that TPG won't make a
>> bid for Amcom at a later date (and lower price?) if the Vocus
>> deal gets scuttled?
>>
>> Looks like interesting times ahead for all involved in the iiNet
>> and Amcom deals...
>>
>> Regards,
>> -Brad.
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