consolidation

... consolidation of the Australian telecommunications industry also Powertel ann.

Powertel confirms suitor proposal
Michael Sainsbury
JANUARY 26, 2007
POWERTEL has confirmed it is in talks that may result in a merger or acquisition, with sources indicating that discussions are centred on an equity deal with wholesale partner Telecom New Zealand (TNZ).

As revealed in The Australian yesterday, Powertel has continued discussions with TNZ about a further alliance following a wide-reaching wholesale and network sharing agreement between the two parties in November last year.

"PowerTel has received incomplete, non-binding and highly conditional confidential proposals from independent parties, and has appointed external advisers to assist in the review of the proposals," PowerTel said in a statement to the Australian Securities Exchange yesterday.

Powertel shares surged 8c on the news to close at $2.13, continuing their strong performance that has seen them soar from $1 last September. The company is now valued at $296 million.

Powertel did not name the companies involved in making the proposals, saying the board would consider the proposals with the best interests of shareholders in mind.

"(The board) will only proceed with any proposal if the whole board considers a proposal to be in shareholders' best interests," the company said.

"At this stage, due to the confidential and highly conditional nature of discussions, investors should not assume that any transaction involving the company will necessarily be agreed or implemented."

But yesterday, TNZ spokesman John Goulter said the company was in talks with Powertel.

"Back in November last year when we announced the wholesale deal with Powertel we said we would continue to talk with them about a relationship for the future," Mr Goulter said.

"I can confirm we are still talking to them about that."

Powertel is the third-biggest fixed-line infrastructure owner in Australia's $30 billion-a-year telecommunications sector.

Coupled with a controlling shareholding by Hong Kong private equity group TVG, Powertel is widely seen as being in the best position to consolidate third-tier players in the sector to create a third major force in an industry dominated by Telstra and Optus.

Powertel holds a 17 per cent stake in Perth-based iiNet, the nation's third-biggest broadband company. Another Perth-based telco Amcom, which has Futuris as a major shareholder, holds 19 per cent of iiNet.

TNZ also hold a 20 per cent stake in Hutchison Telecommunications's booming third-generation mobile business "3".

Optus is also believed to be mulling its options on Powertel.

The second-ranked player might be disadvantaged if a stronger No3 emerged.

The Australian