Management are downplaying embedded networks for a number of reasons, principle one being they don't want competition to be too aware of the embedded network (EN) proposition. There is little/no competition in this space at the moment, and the longer it stays this way, the longer we retain our first-mover advantage. Have a look at slide 16 of the AGM presentation - that explains it in a single slide - we control EVERYTHING in the building beyond the master meter. Our gas, water & electricity meters go into the building, we supply retail services, and we supply a single bill for all those services to the tenants. I've been waiting 10 years to get a single bill from Optus or Telstra and it still ain't happened!!
Now place the Optus announcement into context...it's simply a wholesale agreement at this stage. This allows us to buy voice and data throughput from Optus at wholesale, and then retail it to the tenants of buildings that we control the EN for (and we already have an identical wholesale agreement with a large Gas & Electricity utility). So now we are like Crazy John (without the stupid-looking mascot) - purchase wholesale airtime and retail to our consumers. Assume a building has 300 tenants. Each spends $100 a month on voice and data. That's $360,000 that we get a cut from each year....we currently have 120 ENs that can 'potentially' now make use of this, all of which have signed up to 5-7 year agreements.. Then factor in something like the UWS 'trial'. All those students that we could retail voice and data to. I recall at the AGM that it was stated the UWS trial - if it went full-bore - would become the largest EN in the world!! (maybe they said Australia, but I think they said world - need to check my notes which are at home)
See the potential.....???
AHL Price at posting:
2.0¢ Sentiment: Hold Disclosure: Held
