07/09/28 9:50 AM: Melb ageSeven out to take over UnwiredJesse...

07/09/28 9:50 AM: Melb age
Seven out to take over Unwired

Jesse Hogan
September 28, 2007
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SEVEN Network wants to challenge mobile phone carriers' dominance of wireless broadband through a $169 million takeover of market minnow Unwired.

Within a month of Seven affiliate Engin compiling a 19.9 per cent stake in Unwired — using the network's cash — Seven has secured endorsement from Unwired's board for a cash offer of up to 50¢ a share. Its base offer is 45¢ but Seven will increase that by 5¢ if it gets the 90 per cent of shares necessary for compulsory acquisition.

The move signals that Seven is willing to spend some of the $3.2 billion it raised last year from selling half its media business — including its television stations — to private equity firm Kohlberg Kravis Roberts, on a broadband network to help its other media investments.

The base offer is a 59 per cent premium to Unwired's volume-weighted average price in the three months to August 31 — before Engin's first investment — while the 50¢ offer is 76 per cent higher.

Seven shares increased 13¢ to a record closing high of $13.25 while Unwired shares rose 1¢ to 48.5¢.

Seven chairman Kerry Stokes said investment in the emerging WiMAX transmission technology, long coveted by Unwired, would increase Seven's ability to "compete in new media technologies".

"Despite delays in certification of the technology to date, we believe in the potential of WiMAX as a mobile broadband solution and as an efficient platform for delivering content solutions in multicast and broadcast environments," he said in a statement.

A successful takeover of Unwired could prove crucial for Seven's release of its TiVo digital video recorder next year, which requires internet access to download electronic program guides.

Unwired halted expansion of its wireless network in Sydney and parts of Melbourne in the hope that WiMAX transmission equipment for the wireless spectrum it owns eventually becomes available. That would put it in competition with carriers such as Telstra and Optus, which provide broadband using 3G telephone networks.

Ovum wireless analyst Nathan Burley said there had been persistent doubts about whether Unwired would have the funds to build a WiMAX network.

"It's a great thing for WiMAX in Australia because hopefully Seven, if the takeover does go through, will be prepared to invest some more significant capital into deploying WiMAX through Australia's capital cities," he said.

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