Watch this space
I had the good fortune to attend presentations and discussions with a range of leaders from the telecommunications industry on Tuesday. The space is going to be an interesting one in the years ahead.
While progress to date in rolling out the NBN has been glacial, it is beginning to pick up, and should gain further momentum in 2015 before really hitting its stride in 2016 and 2017. What this will mean for broadband competition in Australia is difficult to predict: in one corner we have a very strong incumbent with a powerful brand and deep pockets; in the other corner(s) a number of credible challengers who now have the scale to be effective competitors – companies like TPG, iiNet and M2.
Telstra has been very successful in marketing its Bigpond offering over the years, and it will be interesting to see whether the challengers can make meaningful inroads into Telstra’s market share as the nation switches over to the upgraded network. However, at this stage it does seem to be the challengers who are most excited about the opportunity offered by the NBN.
Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Joel Webb
:
Do you think the challengers are not super excited because virtually all of them started out as re-sellers (primarily of Telstra and Optus DSL services) but found the real dollars were made when the[y] moved subscribers to their own networks. Now the tables have turned, they operate some of their own significant networks and to varying levels (depending on what parts they own) offers each some competitive advantages. All purchasing services from NBNCo at the same tail price will somewhat level the playing field and leaves them struggling to find their points of differentiation and more importantly places to increase margins.
To re-disrupt the market they will have to “do something different” to the big players (of which they effectively are each themselves now) which is a totally different ball game now they are at scale.
Roger Montgomery
:
Excellent thought Joel