Amaysim Australia Limited (AYS); Opticomm; Singtel; Spirit Telecom Limited (ST1); Telstra Corporation Limited (TLS); TPG Telecom Limited (TPM); Vocus Group Limited (VOC):
While the impact of the NBN rollout on the biggest players such as Telstra, TPG and Vocus dominates the headlines, there is a growing list of smaller telcos looking to lift market share in a rapidly changing telecommunications landscape, writes Stewart Oldfield. Listed NBN reseller Amaysim attracted attention when it launched a first-month free NBN offering in May. Amaysim listed in 2015 as a mobile reseller and now has a market capitalisation of $345 million. Spirit Telecom has shown it is possible for non-NBN providers to prosper. In targeted buildings, Spirit Telecom has overtaken NBN resellers as the dominant provider using a wireless solution for final connections. David Kennedy, who works as a consultant in the telco sector after having spent 10 years as research director for sector specialist Ovum, argues that while the NBN pricing regime is the same for everyone there are advantages for players with higher volumes of traffic. There are four telcos that have major NBN-related infrastructure assets that link up the NBN’s so-called ‘‘islands of access’’ around the country. Kennedy says that controlling significant so-called interconnect infrastructure ultimately gives Telstra, SingTel’s Optus, TPG and Vocus more control of their underlying costs.
BHP Billiton Limited (BHP); Rio Tinto Limited (RIO):
It is hard to imagine a circumstance where the board and senior executive of a global business may welcome news that the dauntingly powerful British Serious Fraud Office has confirmed a corruption inquiry upon their business. But that is exactly the paradox being lived by the cosmopolitan community who run Rio Tinto. While the news from the SFO had a deflating impact on Rio’s share price in both hemispheres of its ownership base, the two-sentence announcement by the regulator was received internally as painful vindication for those steering the Anglo-Australian miner. The fact is there were far worse outcomes on offer here. Indeed, it would be fair to suggest the SFO would have done much more damage to the reputations of the extant board and management fit had gone to the market with a statement that said it had looked at Rio’s self-referral and decided it did not warrant any further review.
Cassini Resources Limited (CZI); OZ Minerals Limited (OZL):
OZ Minerals is expected to commit hundreds of millions of dollars to its Carrapateena copper and gold project within three months, in what is likely to be its biggest single spending announcement on the $980 million project. The OZ board will be asked to approve another batch of funding during the next three months, and managing director Andrew Cole said it would be ‘‘probably the biggest’’ amount of money approved during the development. Mr Cole said he believed value could more easily be created by finding and building mines rather than buying existing ones, and beyond Carrapateena, the company is looking for growth in a number of exploration joint ventures, of which the most significant is Cassini’s West Musgrave project in remote Western Australia.
Coca-Cola Amatil Limited (CCL); Woolworths Limited (WOW):
As Australia’s battle against the bulge grows ever more serious, Coca-Cola Amatil has been desperately trying to increase sales of its sugar-free beverage options. But one of its most important customers isn’t making it very easy. Just weeks after it was revealed that supermarket giant Woolworths isn’t giving any shelf space to CCA’s new ‘‘No Sugar’’ variety, Street Talk has revealed that Woolies is flexing its muscle again by chopping down the number of varieties of CCA’s Mount Franklin water it stocks from five to two. The most popular varieties – the sixpack and the 20-pack – will retain their spots, but otherwise Woolworths is making space for other brands in the category.
Pepper Group Limited (PEP):
Shadow banks will protest over the extensive new powers being given to the prudential regulator, which may curb their lending, increase funding costs and threaten to exacerbate the severity of any housing market downturn. Big non-bank lenders such as ASXlisted Pepper Group, Resimac, Firstmac, Latitude and Liberty Financial are preparing submissions to the Treasury to highlight the risks of the law. These risks include the potential to restrict credit to homebuyers who won’t be able to qualify for loans if the stricter rules now being applied to banks are extended to non-bank lenders. Investors in the non-banks’ mortgage securitisations are also worried by the broad scope and uncertain application of the new laws, which could result in investors demanding higher returns and forcing up borrowing costs.
(Source: AIMS)
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