John Linton
I don’t pay much attention to the various machinations and comings and goings within the communications industry at the ‘gossip’ levels but I couldn’t help wondering whether the recent spate of various different announcements by all sorts of different companies on diverse subjects had any sort of common root cause.
So just consider whether these various ‘announcements’ actually show that something is significantly changing in this country’s communications industry:
Commander finally gets wound up by its creditors
Unsurprising you might very well say - and you'd be correct. However the timing of the 'plug pulling' is the interesting thing. One interpretation would be that the financial institutions didn't want to write off their 'dead' loans prior to 'balance date' (the end of the financial year) and therefore left the minimum amount of time before being forced to acknowledge their money was never going to 'come home'.
No issue in itself, but it very likely isn't the last of such decisions by lenders around the country and does signal there will be less patience than ever with companies that fall behind on their repayment schedule. Definitely a single swallow not making a credit wind back for over extended communication company borrowers - but maybe a 'cloud no bigger than your fist on the horizon'.
Telstra’s loud mouth Burgess quits with a very unlikely ‘reason’ given
Sure his wife's mother may be terminally ill and it may be as simple as that - stranger things have happened - but it isn't likely. What is much more likely is that his unrelenting attacks on the government of the day and Australia's legislation and regulatory bodies had reached the point where even Telstra's board realised that it was completely counter-productive and told El Sol to dump the chump. If that's the case it is one sign of a more compromising approach by Telstra to dealing with the Labor government caused by the need to find a way out of the NBN fiasco.
Telstra decides that it’s best interests are served by giving “3”
access to its 3G network to allow it to survive without investing
outside the main cities
A 180 degree turn on the previous Telstra attitude that "3G will not be wholesaled". Obviously the thought of Hutchison/"3" doing a deal with either Vodafone or Optus was the main factor which, for the first time, shows a crack in El Sol's (Phil Burgess) attitude of "all wholesale customers are parasites" and together with the decision to wholesale the other "absolutely not for wholesale" ADSL2 service to PeopleTelecom indicates some quite significant change of view by Telstra.
Futuris announces ‘there is no future in Australian Telco industry and will sell off its investments in Amcom, iiNet, Westnet etc after only very recently investing more money in them and previously stating they were “here to stay”.Again the timing is the important thing with the preliminary balance sheet and P and L for FY2008 now likely to be with the Futuris directors showing, well, whatever they show. One of the things they obviously showed was that there was no future in Futuris investments in the WA (and perhaps wider) communications industry and they had no faith in Amcom/iinet/et alia showing a greater return on their investment than it had reached at this time (assuming there was any return on the investment at this time). By announcing they were looking for a quick sale Futuris is either indicating that it is in an unhealthy need for some quick cash or it knows something that means it is likely to get less money in the future from a sale as it could right now. (no other interpretations can be put on such a volte face in public statements and the unseemly desire to 'get me outta here").
Internode’s founder/MD announces he will quit the post and concentrate on ‘contacts’ and general advice because the “broadband industry is plateauing".
Irrespective of what the man says - there are absolutely no signs that broadband sales are 'plateauing' generally though they may well be doing that for over priced providers in the ongoing tough pricing scenarios that continue to abound. The timing is consistent with a board looking at the preliminary 2008 results and 2009 plans and saying - "Hmmmm - don't like what I'm seeing for last year and have little faith in what you're saying about next year." Maybe Internode's CEO is the first of the CEO's I alluded to in a previous musing having to explain why his recommendations, even if that means to himself, to invest heavily in ADSL2 DLSAMs hasn't turned out as he said it would?
SPT’s share price continues to spiral downwards (now 16.5 cents) having lost almost 70% of their ‘value’ since the Soul/TPG ‘merger’
What is happening to 'investor belief' when the share price in a company is trading at less than a Price/Earnings ratio of 2? Only two things can be happening for a share price to slide, spiral downwards as the 'merged' TPG/Soul price has done. The first is that a significant shareholder (i.e. a shareholder with sufficient shares to keep selling no matter how many are bought) keeps getting rid of their shareholding at any price or the second is that one or other of them is 'manipulating the SPT share price for some future 'buy out' advantage. Of course there might just be a smallish and inexperienced shareholder who has got some misguided share buying/selling strategy wrong. One thing's for certain a share price that falls by so much in such a short space of time isn't a positive sign of anything. One thing's for certain - SPT won't be reporting a profit for the last trading year despite their repeated statements that they make a profit each month.
Optus’ CEO Paul Sullivan states, with no prompting or encouragement, that there may be three ‘reversals’ of strategic direction in the communications industry over the next 2 years.Never a bad thing to 'cover your bets' and Optus has a lot of bets placed at the moment with some of them (NBN bids with a consortium and alone, Reversed 3G decision, Interesting FY2008 financial results) looking like they do need a 180 or so. However never a good sign when the CEO of Australia's second largest telco is saying that he doesn't know what might happen in the immediate future.
....and these 'announcements' are only from the last few days.
Of course, there could be no sort of relationship at all and they are just the usual over reporting of randomly meaningless micro detail that exists in all industries at all times.
Somehow I don't think it's as simple as that.