You gotta love the sub-text of this piece of 'reporting'.When Futuris made its announcement that it was dumping it's 50% investment in Amcom (and related Amcom investment in iinet) you just knew the Futuris board saw something they didn't like in the near future (whether it was about Amcom or their own need for quick cash) and you also just knew that Futuris wasn't going to find any carrier/comms service provider to pony up any money to take Amcom off their hands for pretty much the reasons I spelled out in an earlier blog a couple of weeks ago (basically no other comms company would value Amcom at anything like what Futuris would need to get for their Amcom shares and Amcom/iiNet are of no interest to other comms companies).
So "some high net worth private investors" will take the Amcom stake off Futuris hands in small parcels "to protect Amcom from .......". What total BS. If Amcom could have found a buyer they would have. Attempting to find some gullible (read newly wealthy) WA individuals is a last resort of someone 'running away from the table'. So what spooked Futuris? I have no idea but some clue, perhaps, can be gleaned from the statements made by iinet filed on 27th August which said "We have deferred transferring WestNet customers to iinet's network to negate the need to invest more money at this time" - or words to that effect - I can't copy the document as it's protected but the document can be found here:
Now, as I remember it, and I can't be bothered to find the actual words, a key reason for the Westnet acquisition was that it would add scale to the iinet ADSL2 dslam network - yet this announcement is stating that it will defer transferring Westnet's ADSL users for more than 18 - 24 months. Why on Earth would you do that? Only one reason springs to my mind - not only that you can't afford to do so but there are no "efficiencies/cost savings" in doing that resulting in your requests for additional investment (Amcom/Futuris would have to be consulted both as shareholders and directors) were seen as a big danger signal that initial 'promises' of ROI would not be met.
Hence the Futuris bail out conducted in, what appears to be, unseemly haste. They have invested significantly in both Amcom and iinet and have got very little return so far and the ONLY conclusion you can draw from their volte face in less than 3 months is that something has come to their attention that indicates that they won't be getting even the expected returns they had budgeted for and, worse, they may have to tip in more money to keep the whole thing going. This view could be quite wrong but it's supported by the fact that, at least as at today, no Australian telco/carrier/provider wants to take iinet/Amcom off their hands even at an 'attractive' (read fire sale) price - presumably because they can see no real chance of getting any realistic return on their investment.
One more indication that the whole of the telco/service provider 'sector' is taking a very jaundiced view of the near and medium term future of the communications business in Australia.
Today is the last day for public companies to report their FY2008 results and more than one communications company has not done so, which apart from being a breach of SX regulations shows an unhealthy disinclination to make public their actual results versus their promised performance over the last six months. TPG/SPT said it will publish its results three weeks late due to the 'merger' but said it would announce a major loss rather than the profit it estimated at the time of the 'merger' but I haven't followed the statements of the penny dreadfuls as to why they may be late if in fact that turns out to be the case.
What is undoubtedly true, and easily the most likely reason for iinet's statement to the effect that "further investment in ADSL2 is on hold" is clearly the problems of the NBN 'tender' which has undoubtedly frozen a great deal of ADSL2 and related investments by every network owner in Australia. It's clear from their inactions and constant date shifting that its only now beginning to dawn of CK and ESS (and the rest of the ill educated and doctrinaire rabble that is currently posing as the Australian Federal Government) that they have no idea what they are doing and even less idea of the paralysis their 'sound bite policies' have caused across the continent. The latest 'parliamentary exchange':
shows how totally ineffective CK is - "it's all Howards fault. What do you expect me to do" he whined, yet again, yesterday. What a total waste of space that man is. After nine months as the government what have that pathetic bunch of no-hoper losers actually done?
So the worth of the Amcom shares is yet another indication of the effect of Crazy Kevin's "policies' are causing - paralysis of all communications investment and rapidly declining value of communications companies - oh, except one of course.
Lucky that Telstra reported such healthy profit increases for FY2008 -
otherwise you might get the impression that investing in an Australian
communications company is just a way of burning $A100 notes.