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Millepede looks to tie up market share

THE potential to raise public capital proved the deciding factor for the directors of Millepede International when they made the decision last year to base their corporate HQ in Perth.

Just more than a year later and Millepede International isn’t yet a name on everyone’s lips in WA, but it’s a different story in the European telecom industry.

Millepede is, in effect, the middleman between the manufacturers and distributors of a patented plastic product called the Mille-Tie, a soft cable tie strip that grips cables without overtightening them.

Millepede managing director Vincent de Villers said WA was chosen as the company’s corporate home for purely practical reasons – the State seemed to offer Millepede its best chance of successfully raising public capital.

“I wouldn’t have got an IPO away anywhere else in the world,” Mr de Villers declared.

The company is pinning its hopes on players in the European telecommunications industry deciding to adopt the Mille-Tie for bundling together fibre optic and the more common Category-5 and -6 computer cables.

The attraction, Mr de Villers says, is that the Millepede product does not constrict the cables over time and thus does not restrict data flow between equipment.

He says the current standard for cable ties shrink when they become wet, reducing bandwidth by up to 20 per cent, while the main alternative – Velcro – is relatively expensive at about twice the price of the Mille-Tie. This product, on the other hand, has a maximum distorting effect of just 0.01 per cent.

“What that means for companies that transport data or put cable management systems in is that they can more or less guarantee their systems are going to be successful,” Mr de Villers said.

Millepede says the global telecommunications industry uses 6.4 billion ties each year. Based on the company’s current profit margins, which it will not disclose, Millepede is forecast to break even on sales of between eight million and 12 million ties per year. At an approximate price of 15c per tie this works out to about $1.5 million per annum.

Millepede listed on the Australian Stock Exchange in August last year after raising about $4.3 million in its IPO.

Since listing, the company’s Mille-Tie has been approved by the multinational telcos Krone Group and Fujikura Limited for use in their training schools. Millepede sees great advantages in this, and is banking on word passing through the industry that its product is the best – the training schools will tell cable installers to use it and, in time, cable manufacturers will stipulate that the Mille-Tie must be used, it hopes.

“Now, when that happens, that should open the floodgates up for all our telecom users because everyone’s in competition, so the last thing that any company wants is to have another company that’s got the edge on bandwidth,” Mr de Villers said.

Millepede’s primary focus is on Europe, with about a quarter of resources dedicated to the United States.

While the company is Australian-listed, there are no immediate plans to develop a market in this country.

“It’s a very expensive business getting a new product into a global market, so if we don’t want cash to run out we’ve got to focus on one market really,” Mr de Villers said.

“We throw most of the money at Europe – that was the one that took the lead so that was the one we’ve backed – and we’ll throw a little bit of money at the (United) States because companies like Fujikura and Krone are multinational companies, so they like us to be in the US as well.

In Australia, though it’s the home market for the listed company, people are more excited by the global market than the local market because it’s so small.”

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