SingTel – DMG

Optus Goes Vivid

THE BUZZ

Singtel announced yesterday that its wholly- owned subsidiary, Optus Mobile Pty Ltd has signed an agreement to acquire all the issued shares in Vividwireless Group (VW) Ltd from Network Investments Holdings Pty. Ltd for a cash consideration of AUD230m. Vividwireless holds spectrum licenses in the 2.3GHz band and operates two wireless broadband businesses under the brandnames of ‘vividwireless’ and ‘unwired’. The completion of the transaction is subject to various conditions precedent including the reissue of the 2.3GHz spectrum licenses and approvals of the Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board.

OUR TAKE

Zeroing in on the spectrum. We view the acquisition positively for Optus given the access to 98MHz under the 2.3Ghz band, a prized asset that will complement the 1800MHz band being used for its upcoming 4G (LTE) mobile rollout. Optus stands to gain immediately from an existing fixed wireless brand in the market and a ready base of customers to migrate, allowing for the up-selling and cross selling of bundled mobile and broadband packages. This should result in longer term ARPU accretion and stickiness. We believe Optus will be add value to VW than it would be possible under Seven Network as it is already supplying backhaul infrastructure to VW. The acquisition is well timed ahead of the move into next generation networks (NGN) where competition in the market is expected to intensify. There is strong potential for mobile and wireless broadband in Australia given the estimated broadband penetration of 49% in the country. Also, the vast terrain makes wireless broadband more a more cost effective solution to reach out to certain sections of the market which are not covered by fixed access.

SingTel – DMG

Optus Goes Vivid

THE BUZZ

Singtel announced yesterday that its wholly- owned subsidiary, Optus Mobile Pty Ltd has signed an agreement to acquire all the issued shares in Vividwireless Group (VW) Ltd from Network Investments Holdings Pty. Ltd for a cash consideration of AUD230m. Vividwireless holds spectrum licenses in the 2.3GHz band and operates two wireless broadband businesses under the brandnames of ‘vividwireless’ and ‘unwired’. The completion of the transaction is subject to various conditions precedent including the reissue of the 2.3GHz spectrum licenses and approvals of the Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board.

OUR TAKE

Zeroing in on the spectrum. We view the acquisition positively for Optus given the access to 98MHz under the 2.3Ghz band, a prized asset that will complement the 1800MHz band being used for its upcoming 4G (LTE) mobile rollout. Optus stands to gain immediately from an existing fixed wireless brand in the market and a ready base of customers to migrate, allowing for the up-selling and cross selling of bundled mobile and broadband packages. This should result in longer term ARPU accretion and stickiness. We believe Optus will be add value to VW than it would be possible under Seven Network as it is already supplying backhaul infrastructure to VW. The acquisition is well timed ahead of the move into next generation networks (NGN) where competition in the market is expected to intensify. There is strong potential for mobile and wireless broadband in Australia given the estimated broadband penetration of 49% in the country. Also, the vast terrain makes wireless broadband more a more cost effective solution to reach out to certain sections of the market which are not covered by fixed access.

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