PWT powertel limited

tvg starts a big, big telco move

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    TVG starts push to create Australia’s 3rd carrier

    The next six to twelve months could see PowerTel fast track an industry consolidation with the possibility of controlling shareholder TVG rolling DSL carrier Request into its fold. Speaking to Communications Day, TVG director and newly appointed PowerTel board member John Troy said that "within six to twelve months we would like to see something accomplished." He said that machinations of consolidation will create a strong third player in the market over the next few years, which he "absolutely " believes will be PowerTel. "We want to get started on that right away," he said.

    "The infrastructure that is out there is just a matter of being mopped up by liquidation and consolidation and that's when you will see pricing power return to the survivors." He added that this was one of the attractions of the PowerTel asset, as "it is certainly the right vehicle to force that consolidation."

    While the new PowerTel board had its first meeting last Tuesday, "hard proposals" on the acquisition front have yet to be made. But Troy said a will come "sooner rather than later, its something that makes sense, the rationale is there, so I hope that everybody could see that. "

    Troy said that Request, another TVG investment, satisfy's PowerTel's objectives going forward which is to capture more of the carrier’s addressable market and to expand its that market. "They satisfy both objectives for PowerTel and they have been very creative in the products that they have been offering. They can greatly expand the addressable market using DSL technology which is in over 50 exchanges." He added that with Request's 11,000 corporate customers, “great shape" financially and EBITDA positive position, "they'd have to be a leading candidate."

    With two to three targeted acquisitions and around $100 million in funding available in the next 2-5 years, Troy confirmed a number of assets were being considered. Aside form the "deep pockets” of TVG, its investors and co-investors, Troy said interest has been expressed from various other private equity funds, venture capitalists indicating that they wanted to participate in the next phase of consolidation.

    Questioned on a potential Uecomm purchase, Troy said that the company satisfied at least one of TVG’s acquisition criteria. "Uecomm helps at least expand the addressable market. I don't know if they help us capture more of the market, there are other companies that help us do that. Uecomm is strong in the south, where PowerTel's network in the south is underutilised, so maybe Uecomm can strengthen up our sales and marketing down there. They are strong where we are not so I guess the synergies are there."

    Troy said that the distressed assets of IP1 and Nextgen were being closely watched with "great interest”. On PowerTel’s need for east-west capacity, Troy said "we don't think we necessarily have to buy the companies we just have to put our hands up to get capacity. But if the price is right..." While active consideration of any potential assets in the west has not been explored yet, he confirmed that Amcom would “be on the list” of potential acquisition targets for PowerTel. In terms of TVG's future activity in the Australian market, Troy said anything further would be through its existing portfolio companies. " I don't think TVG will making many more just stand alone investments here. But we do intend to do some more M&A type work through the portfolio." Troy indicated that Request would be acquiring further assets in the short term. "We are looking at something at the moment but I can't say whether its going to get done."

    Troy said the SME market will be a strong focus for growth for PowerTel . "The opportunity is in the SME market. PowerTel is fairly strong on the corporate area, SME is the opportunity right now and its an area that they haven't been able to serve because of the fact that hey are only in 600 buildings. And SME are all over the place so with DSL reach it is he name of the game right now."

    Meanwhile, the PowerTel board is planning to add a new director, probably a retired telco executive or an executive with close ties to the local business community "that could bring us in some large customers”.

    Natalie Apostolou
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