$280 million to build, sold for $60 million. TransACT sale [With poll]

caf said :

Keijidosha said :

TransACT only approached the low hanging fruit: stringing cables in suburbs with existing power poles (new Gungahlin developments excluded). They avoided trenches in established suburbs like they were afraid of digging up zombie corpses.

That’s not entirely true, there’s definitely TransACT ducts in Braddon.

I think you will find the ducts in Braddon and other inner city area’s came later to get business traffic, especially government departments. I think they took over or share with the ICON fibre network that was built by one of the fed departments. So for the most part the posters comment is correct that for the most part Transact is over-head cable only, hence why large parts of southern Tuggeranong, most of Gungahlin and the newer parts of Belconnen don’t have access.

Yes, it would have been a different story for TransACT if they’d offered today’s speeds and prices several years ago. It’s not like the VDSL network is much different now to then. Instead, they watched iiNet and all the other ADSL2 ISPs take the lion’s share of the market by charging less and offering more. iiNet’s first 2 DSLAMs in Australia were in the Civic and Deakin exchanges.

It could have ended differently if their management had a clue about attracting customers. They were too conservative and reactive. Charging more than anyone else and only lowering prices long after they became totally uncompetitive isn’t going to win you volume business. Market share is the only way you’re going to earn $200m in a market of a couple of hundred thousand subscribers of domestic broadband.

Even today, they are rolling out VDSL2 – fastest Broadband in town for everyone not on FTTH – and it’s priced attractively….. Yet they’re doing it at a snail’s pace. Most people in the VDSL areas will be lucky if they have VDSL2 available in 12 months. If the whole Phase 1 network is getting it, TransACT should spend the money now, instead of later. They could get some market share instead of waiting for the NBN to come and take everyone after faster Internet.

Let’s see what iiNet does over the next few months. MM says he doesn’t want to run TransACT so current management is staying. I’m not sure that is in their best interests..

caf said :

Keijidosha said :

TransACT only approached the low hanging fruit: stringing cables in suburbs with existing power poles (new Gungahlin developments excluded). They avoided trenches in established suburbs like they were afraid of digging up zombie corpses.

That’s not entirely true, there’s definitely TransACT ducts in Braddon.

Fair point, yep there were runs of underground cabling in higher-density (read: higher profit) areas. I was making a broad statement about entire suburbs that missed out on cable connections. Although you could argue whether residents of those suburbs really missed out on anything!

I still remember when two TransACT reps lobbed on the door of my parents house in 1996, extoling the virtues of TransACT services and promising the world if we agreed to sign up for phone services before the cable was rolled out.

Given that we lived in a suburb with underground services I asked when the cable installation would happen. They couldn’t give me an answer and were sent packing. 15 years later and the cable still hasn’t been laid.

TransACT was a con and a rip-off. They sucked people in with the lure of cheaper electricity (“bundling”) and promised fast cable Net but throttled it making it slower than ADSL whilst charging like a wounded bull. It was a relief to escape their clutches, pay $600.00 ransom and return to the sanctuary of Telstra. And when someone actually praises Telstra compared with another telco, you know the other crowd was the absolute pits.

shadow boxer said :

Anyone else see the parralels between this fibre to the home exercise and the NBN ?

Privitisation! Once you add government beaurcracy into any major infrastructure investment it will always cost at least 5 times as much.

Keijidosha said :

TransACT only approached the low hanging fruit: stringing cables in suburbs with existing power poles (new Gungahlin developments excluded). They avoided trenches in established suburbs like they were afraid of digging up zombie corpses.

That’s not entirely true, there’s definitely TransACT ducts in Braddon.

shadow boxer said :

wow a $55.3 million dollar loss, you would think heads would roll……..too much time spent trying to build soccer kingdoms maybe.

…and to all those 100s of TransACT and ActewAGL foundation memberships.

wow a $55.3 million dollar loss, you would think heads would roll……..too much time spent trying to build soccer kingdoms maybe.

dungfungus said :

Something doesn’t add up here. If TVG invested $29 million in 2000 for a 43% stake in TransACT this means the original paid up capital was $67 million but Actew has invested $60 million and only has an 18% share? At one stage Actew had a 25% share but sold off the difference between that and the current shareholding to an associated company. There was never a public explanation for this but perhaps it was to avoid closer scrutiny of TransACT accounts which were not always audited and Actew’s balance sheet was qualified accordingly by the ACT Government Auditor. Actew also provided a “standby facility” of $25 million to TransACT in recent times and this appeared to have been fully drawn down.
Not surprisingly, one of the Industry Super Funds, who have a lot of “unlisted assets”, has copped a substantial loss.
To top this off, Mark Sullivan from Actew is quoted in the Canberra Times this morning as saying “there will be a small book profit for Actew from the sale”
Legislation is required to stop the ACT Government and its subsidiaries from dabbling in “enthusiast ventures” and sporting sponsorships which are underwritten wholly and soley by the ACT ratepayers. Recent examples of this are Rhodium, the Arboretum, Glassworks, Totalcare etc.

The only reason ACTEW makes a small profit from the sale is that they have already taken the loss on the investment by writing it down in previous years. By the looks of the SMH story, they invested $60m over the years but have written it down to $4.7m in their balance sheet as of now. Their share of the sale price will be slightly more than $4.7m hence they make a profit on the sale.

It’s a bit like going to the races, dropping $500 on races 1-7 and then winning $50 back on race 8.

Classified said :

It would be interesting to see if iiNet put any value on the work doen digging trenches and laying conduit, meaning that when iiNet needs to upgrade cables they don’t need to do much digging. There’d have to be a fair bit of savings there.

TransACT only approached the low hanging fruit: stringing cables in suburbs with existing power poles (new Gungahlin developments excluded). They avoided trenches in established suburbs like they were afraid of digging up zombie corpses.