Nice to see a different view, even if it's one I agree with. 1....

Nice to see a different view, even if it's one I agree with.

1. Possible. I think worst case scenario is TPG cough up a little more to sweeten the deal and make sure it goes ahead if there's any resistance.
2. Don't see much risk personally. Leave iiNet as a stand alone the way it is. Teoh is not going to change a successful model, he just wants the cash. The benefit is in using the assets TPG own to reduce the network costs. The cost savings from using PPC-1 and TPG's fibre infrastructure within Australia will flow back into the bank account. Look at difference in margins of TPG compared to IIN and MTU, this is purely from owning infrastructure which gives them competitive advantages.
3. Don't see people cancelling their Internet in a recession. If anything, they are more likely to stay home and use Internet as a low cost form of entertainment. I see the cost of an Internet connection as being a fixed cost. $60/mo between a household is pocket change when you consider the hours of entertainment it can provide. Take the family out for a meal and you'll easily do $60 and more.
4. FTTB does not make up a material part of their revenue. TPG can still connect customers on the infrastructure NBN build anyway, so win-win for them either way.
5. Market competition? There are only 3 now - Telstra, Optus and TPG. They can cooperate and share the spoils, there is no need to enter into a pricing war. If Telstra or Optus was to enter into a pricing war, they would be cutting their nose off to spite their face. TPG has existed as a low-cost provider for many years and Telstra/Optus have never entered into a price war, why would they start now after the industry has just gone through a consolidation phase to prepare for the NBN world? It is only going to get tougher for the smaller players like MTU who don't own the infrastructure.


1. No growth doesn't mean the stock will go down. My calculations show free cash flow of $520 million yielding ~7%. with the iiNet takeover bolted on Far from over-priced IMHO. PE ratio is misleading for this company, focus on the cash. Teoh uses debt to provide a tax shield, which combined with the non-cash expenses of depreciation and amortization, gives a disingenuous view of TPG in the accounting profit.
2. See above.
3. Not worried about the employee costs. IIN has higher prices and limited data plans, which more than offset the extra employee costs they will pick up. The extra $10/mo their customers pay is an extra 15%, enough to cover the extra staff costs. TPG also benefit from lower network costs due to limited data usage.
4. Financial accounts are not that clean? Any evidence to back that claim up? The accounts have been audited and the opinion is unqualified as far as I know.
5. Disagree strongly. Telstra and Optus have never entered into a price war and have no reason to start now.
6. Mobile revenue is not material, it is insignificant. I say we get any possible growth in the mobile market for free.

I bought more at $8.80 thinking it was great value after getting my initial parcel at $2.57 over 2 years ago. I guess we can agree to disagree here.