Concerning that NBN consumer efforts are being slowed down. It should be possible for VOC consumer subsidiaries to make profits with their footprint and backhaul assets. NBN will also be impacting enterprise accounts increasingly. Everyone with a large branch network is being prospected by NBN with an offer to roll out fibre for a once of capital payment for each site that is a fraction of the build cost for a VOC or TPM. Officeworks, Coles, Woolies all taking this route.
NBN still require a reseller to "own" the account, but the revenues are 20% of what an on-net build would be. And at the end of 3 or 4 years, the fibre owner used to own the fibre paid off, so any re-sign was at massive margin. If NBN own the fibre, the margin is is no better than reselling Telstra.
For 20 years businesses like PIPE and later VOC have made their money by building fibre footprint out to businesses, then making out like bandits after the initial build costs are repaid. With the NBN cannibalising that growth longer term enterprise revenue will be flat or worse.
IMO, the only telco investments left are straight DC owners, who can charge like utilities, niche wireless plays and possibly 5G last mile replacement for consumers. None of these are going to be enough for VOC or TPM. TLS may emerge at the other side after a bunch of pain as a much smaller business, and Optus as an also ran. NBN being sold off may change the scenario, depending on the deal. There may be money to be made trading these, but I don't believe they are investment grade.
VOC Price at posting:
$3.86 Sentiment: None Disclosure: Not Held
