re: swt network for 50 000 customers - grant62
Hi extralite,
Yesterday's decision gives the other ISPs some margin protection, but it knocks the stuffing out of there being high to higher gross margins, and substantial fat. The name of the game is market share, price erosion (generally), margin capping (for most ISPs), pricing risk (for most ISPs), and margin floor capping (for Telstra).
By doing this, Telstra have ensured that their wholesale and retail businesses both grows. They will now compete aggressively on: 1) content offerings; 2) cross subsidisation through carrying backhaul traffic on their own network (whilst ISPs will pay for this as a new cost); 3) risk transfer (as the risk of excess usage now passes to the ISP who will struggle to pass it on to their customer base); 4) advertising; 5) scale; 6) bundled offerings, etc.
This is textbook economics at it most potent and will result in Telstra dominating the future direction of broadband in Australia.
As for DFT, I have posted separately on this.
As for my holdings, I hold TLS, TEL, VOD, HWT (re: HTA), and SGT (and several other European carriers), on the operator side. Most, I hold for growth, but with TEL and TLS, I hold for yield and near term exploitation of new opportunities (especially, concerning Sigma 6, and TelstraClear, from a TLS perspective).
