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broadband growth

  1. whiteyg

    2,404 Posts.
    This sort of growth predicted bodes very well for the players still left, eg DFT, AMM, SWT. and others.
    comments appreciated.

    SHAW Analyst Comments: Telstra sees broadband growth
    July 30, 2002
    Update on broadband strategy

    Telstra (TLS) gave an update on its broadband strategy, and projections to 2005 / 2006. An interesting point of the presentation is the timing – either to ensure the details do not get lost in the FY result, or to provide a growth outlook for TLS if the FY result is flat. TLS FY result due 28 August.

    Main points from the presentation

    There are currently 7.5M homes in Australia, half connected to the Internet (3.6M). Of these, 300,000 are connected via broadband (including 175,000 direct TLS customers and the balance wholesale customers).

    TLS expects the number of broadband connected households to increase to 1M by 2005, and revenue to increase to $1B in 2006 (TLS group revenues currently $20B).

    TLS has spent $300M on capex to install the infrastructure, and expects to have spent $900M by 2006 on broadband enablement. With $1B in revenue, the payback is expected to be rapid.

    Infrastructure is open architecture, primarily Java (Sun) and Microsoft. TLS will stimulate demand and applications development to grow the new market rapidly

    Example applications include Health, Education including distance education, and SME market (large corps and govt would use more robust ISDN and Virtual Private Networks rather than this broadband network). Consumer products (Java capable internet mobile phones) are already available to stimulate consumer demand.

    TLS philosophy remains “any device, anywhere, any time” connectivity

    TLS believes Australia is now ready to adopt broadband services rapidly

    Foxtel update

    The Foxtel partners (TLS, PBL and NCP) have requested immunity from ACCC regulation if they commit $500M to digitalising the Foxtel network. Foxtel argues that third parties will have access to the 600 channels available, but do not want the ACCC to regulate access or pricing to these channels. This would give TLS control over third party access to Foxtel, not the ACCC.

    Productivity Commission

    This is clearly at odds with the implied recommendation of the Productivity Commission, which took pains to explain the importance of Pay TV and its unencumbered development. We would hold the view that it is not healthy in a “competitive” environment for the monopoly supplier of content to control the primary distribution network unregulated.

    ’03, ’04 PEs and Yields 14.3x, 13.4x and 4.8%, 5.0%.

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