More mergers coming

THE rationalisation of second tier players in the telecommunications industry is likely to continue with Perth-based Amcom Telecommunications predicting that it will be involved in a merger within the next one to two years.

Amcom chairman Tony Grist said people only needed to look at what was already happening in the sector, pointing to recent Amcom developments and those involving other second tier players such as eastern States-based companies Powertel and UeComm.

“There’s an opportunity for a larger player, or a larger organisation from offshore, or a financial player that is an opportunist to play the aggregate of the second tier sector,” Mr Grist said.

“It would be logical when an aggregator comes along in 12 months to two years that they will complete a portion of the jigsaw puzzle and will come knocking for either a friendly or hostile takeover.”

The prediction follows a deal between Amcom Telecommunications and Ausdrill Ltd allowing Ausdrill the exclusive right to provide customer installation services for Amcom’s expanding broad-band network in exchange for $8 million in working capital.

Mr Grist said the Ausdrill deal provided a funding option that had softer conditions than the banks and that Amcom would use the money to repay about $1.75 million in debt, increase its volume of customers and expand its network.

In May a 45 per cent share in Powertel was bought by the Roslyndale Syndicate, made up of what Mr Grist described as “high net worth individuals” Trevor Kennedy, Sam Gazal and Geoffrey Cousins from ailing US company WilTel Communications Pty Ltd.

The deal included the acquisition of WilTel’s $21.3 million debt and included the underwriting of a $16.3 million capital raising.

The announcement was greeted positively by the sharemarket and the news more than doubled Powertel’s share price.

Then, more recently, it was announced that UeComm was to be sold by Perth-based AlintaGas, which is taking control of UeComms’ parent company United Energy.

“UeComm will soon be ultimately a subsidiary of AlintaGas from Perth pursuant to the acquisition by AlintaGas and the AMP of assets of United Energy,” Mr Grist said. 

“United Energy had, as one of its assets, a controlling shareholding in UeComm.  So what you’ve got is another major second tier player effectively changing.”

Mr Grist said the strong and continuing demand for broadband services in regional capitals was a major growth area and Amcom was well placed to service its niche markets and focus on delivering sales and earnings growth.

He said Amcom’s position continued to strengthen and its recent deal with Ausdrill Ltd was part of an overall expansion plan that incorporated expanding into three or four more outer-metropolitan industrial centres such as Kwinana and the small to medium-sized enterprise end of the market.

Mr Grist said Amcom’s expected growth in the next financial year was expected to be in excess of historic annual revenue growth. He said that while the recent demise of long haul fibre-optic company IP1 was disappointing it would not affect Amcom.