AAPT buy could build TPG’s business market: analyst

The purchase of AAPT by TPG Telecom (ASX: TPM) could see the ISP grow its business market and take advantage of AAPT’s fibre assets, says independent telecommunications analyst Chris Coughlan.

Telecom New Zealand has sold its Australian AAPT unit to TPG Telecom for $450 million. The Goldman Sachs-managed sale is expected to be completed on February 28, 2014.

“AAPT has been flat at best since it was taken over by Telecom New Zealand in 2000. For them, getting rid of that millstone is probably a good thing,” said Coughlan.

“For TPG, it is not a bad deal. The [AAPT] fibre assets and business market complement’s TPG’s consumer division.”

Coughlan pointed out that in September 2013, TPG announced plans to offer “fibre to the basement” plans offering up to 100Mbps for $69.99 per month. Fibre to the basement runs fibre to the basement of buildings and uses existing copper within the building to deliver the last mile connection.

“There is opportunities for TPG to use AAPT’s assets and the goodwill it has in the business market to grow that side of the business. It could also become a better competitor to the likes of Optus and iiNet in the enterprise space,” he said.

TPG has made several moves this year to build up the company’s infrastructure and bring new services to market.

The telco paid $13.5 million in the Digital Dividend auction to acquire 2x10MHz of spectrum in the 2.5 GHz band, leading to speculation by some analysts that TPG was positioning itself to be Australia’s fourth major mobile network operator.

At the time, TPG called the new spectrum “a valuable asset which, with developing technologies, will bring TPG the opportunity to offer innovative and value-adding products to its customers, particularly in the increasingly important wireless broadband market”.

In August, TPG announced it would acquire international fibre capacity on Hawaiki Cable Limited’s Australia to US undersea cable, a 14,000 km cable running from Sydney to the west coast of the US, crossing New Zealand and Hawaii. Using the latest 100 Gbps wavelength technology, the cable is expected to provide up to 3 Tbps per second capacity.

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