@zadah
Knowing that you are a HTA shareholder, I can understand that you are happy that VHA has taken the Open Signal crown from Telstra.
However, knowing that these things change all the time, as an investor, I wouldn't read too much into it. As an investor, we should be focused on the financials first and awards second.
As for your assertion that TPM is in trouble, I have to disagree completely.
Since this time last year when TPM won the auction of the 700MHz, things have progressed very far:
1. TPM managed to beat its EBITDA guidance for H1 2018, by finding more cost savings from its operations.
2. TPM won the Adelaide's Ten Gigabit network contract in December 2017 and in approximately 3 months since TPM won the contract, the network is already connected to approximately 200 buildings, with a target of 1,000 buildings to be connected in the next couple of years. The pricing offered is extremely good value and competitors are very unlikely to be able to match let alone beat them.
3. 16 months into the Singapore mobile project, TPM is still confident that the whole project will be delivered on time and within budget. They have announced an opening promotion whereby Singaporean seniors will be able to get free sim plans for 24 months with 3GB and unlimited calls/sms per month.
4. Similarly, 12 months into Australian mobile project, TPM is also still confident that they are on track with time and budget. In fact, they are planning to have initial clusters of sites ready by mid 2018 not just in Sydney, Melbourne and Canberra, but also in Adelaide and Brisbane.
5. TPM was the first company to announce a new pricing on their NBN50 service, that was same price as their previous NBN25 product, but obviously with a better speed. Other companies took weeks to update their products, some even strangely still sell NBN25 products. And a few weeks ago, TPG was rated as the top NBN provider for average download speed in ACCC’s Measuring Broadband Australia program.
6. Last week, TPG announced a new pricing structure for the mobile sim only plans. The new pricing is very aggressive and brings TPG back to be the leader in the market. I expect this initiative to assist in addressing the declining mobile subscribers numbers.
7. Starting in exactly 7 days time, i.e. 1 May 2018, TPM will start billing VHA (your company) for the dark fibre services delivered over the 4,000kms extension that was agreed back in September 2015. The minimum contracted revenue that TPM can expect from VHA for the next 15 years is $900m.
It is worth noting that TPM is able to use the same fibre cables to sell products to new corporate customers or even FTTB customers.
With data usage likely to continue to increase, I believe that the $900m figure is quite conservative, in other words, it is very likely that VHA will have to pay TPM more in the future.
And most importantly, TPM now has more choices for mobile base stations (that are shared with VHA) which are already connected to their fibre backhaul.
8. Unlike Telstra, Optus and VHA who will still need to maintain their 3G network for the next few years, TPM is going to start with 4G only. This gives TPM the benefit of reduced operational complexity and costs.
And in a few years time, when the need to upgrade to 5G arrives, the small cell deployment and Cloud RAN network architecture that TPM is currently implementing will also be 5G ready.
This is the reason why I believe TPM's mobile cost structure will be lower than the incumbents' by several magnitude, just like the experience of other mobile disruptors such as Jio in India, Free in France, etc.
9. iiNet FTTB products are now in the market. With 2 brands selling essentially the same product, TPM will now have more chance of attracting customers who are more attracted to the "upmarket & premium" iiNet brand.
10. As for roaming deals, I'm confident that one of the 3 incumbents will sign a roaming deal with TPM. It's better to get something out of TPM from roaming, then to completely miss out on the growth of a new competitor.
In my opinion, the motivation behind a MNO signing a roaming deal with another MNO is similar to a MNO signing a contract with a MVNO. They get to acquire a large number of subscribers without having to spend too much acquisition costs and they also get to improve your own network utilisation rate.
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Therefore, in conclusion, I don't share your worry about TPM at all. In fact, I'm actually quite optimistic about TPM's future. I think what we are witnessing now is once in a generation opportunity to be part of a project that will disrupt a cozy market to the core.
And by owning the infrastructure crucially needed for the economy of the future, TPM, as a the lowest cost operator, is perfectly positioned to benefit for many years to come.
I am also happy to say that I have also used the recent price weakness to increase my TPM holdings last week.
Good luck with your HTA investment!
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