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

By johnboy - 22 November 2011 22

fibre optic

The SMH has the stark tale of just what TransACT has meant to its investors including the people of the ACT now that the sale has crystalised the investment:

TVG Capital, Motor Trades Association of Australian Super and ACTEW are among investors that will get $60 million from the sale of Canberra broadband provider TransACT to iiNet – an asset that cost them $280 million to build over 10 years.

Could it have ended differently if they’d stuck to the starry eyed plan of ten years ago? Or would it have just been good money after bad?

TransACT looking back

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[Photo by St_A_Sh CC BY]

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22 Responses to
$280 million to build, sold for $60 million. TransACT sale [With poll]
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JC 7:36 am 23 Nov 11

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.

Grrrr 12:57 am 23 Nov 11

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..

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