Network Expansion

[handsomeinked]

I see on ISP Review there seems to be some early doors speculation that VM may bid for FTTP ISP Trooli. Could this be the start of the JV rapidly expanding by purchasing failing Alt-Nets (alternative network providers)? I know VM’s drive is to move everyone off coaxial and onto FTTP XGS-PON so I am sure there will be a lot of smaller network builders that can’t make money and will need gobbling up or will be asset stripped over the next few years as competition hots up. 

https://www.ispreview.co.uk/index.php/2023/02/virgin-media-o2-uk-could-bid-gbp100m-for-full-fibre-is...

[Client62]

Buying failing Alt-Nets, No No No.

From an M/A perspective that is the way to acquire a whole load of debt.

[Roger_Gooner]

The reason for buying an altnet is to get your hands on its subscribers and its network of cabinets, ducts, cables and ONTs. If this makes commercial sense, like the price is right, then VM will do so. How else do you think NTL and Telewest got to be the last two big cablecos standing?

[unisoft]

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@Roger_Gooner wrote:

The reason for buying an altnet is to get your hands on its subscribers and its network of cabinets, ducts, cables and ONTs. If this makes commercial sense, like the price is right, then VM will do so. How else do you think NTL and Telewest got to be the last two big cablecos standing?

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I'd rather another bigger ALTNET buy them than VM. Its anti-competitive if BT or VM buy them. Just my view in a democracy.

[Andrew-G]

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@Client62 wrote:

Buying failing Alt-Nets, No No No.

From an M/A perspective that is the way to acquire a whole load of debt.

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Logically they'd buy the assets, not the company.  That hangs investors and lenders of the altnet out to dry, but that's what happens when a company goes bust. 

If they haven't yet gone bust, then any sensible buyer either waits until they do, or negotiates from such a position of strength that the debt holders agree a partial recovery, in exchange for the equity holders being flushed screaming down the toilet.  Things are different if there's a competition (eg both CityFibre and VMO2 were interested), and then there's a dangerous game of bluff - both parties want the assets for the lowest price, if they don't get it they want to bid the price up for their competitor but without then being saddled with the over-bid assets.

As a broad rule (supported by years of research), any corporate buyer like VMO2 will make a complete pig's ear of M&A.  Vodafone have made incompetent M&A the cornerstone of their strategy, and Lutz is keen to get in on the action himself.  M&A always makes incompetent CEO's get all lathered up, because it's a welcome distraction from the boring and mundane hard work that is involved in running a business well.

[Andrew-G]

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@unisoft wrote: I'd rather another bigger ALTNET buy them than VM. Its anti-competitive if BT or VM buy them. Just my view in a democracy.

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And a view you're entitled to.  I'd prefer that Trooli were absorbed by a viable altnet offering wholesale access.  Bear in mind that VMO2 have been repeatedly rumoured as potential buyers of various companies and broadband customer bases without anything coming of those rumours.

However, if VM buy them, it's not anti-competitive since Trooli aren't big enough to be a material player in the national context, nor locally in terms of overlap with VM.  There would be no change for customers in Trooli's footprint in terms of the number of options open to them.

[Roger_Gooner]

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@unisoft wrote:

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@Roger_Gooner wrote:

The reason for buying an altnet is to get your hands on its subscribers and its network of cabinets, ducts, cables and ONTs. If this makes commercial sense, like the price is right, then VM will do so. How else do you think NTL and Telewest got to be the last two big cablecos standing?

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I'd rather another bigger ALTNET buy them than VM. Its anti-competitive if BT or VM buy them. Just my view in a democracy.

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How can this have anything to do with democracy as nobody votes for this kind of thing. There would also be no problem if VM were to buy Trooli whose build share of the market is a mere 5%. The Competition and Markets Authority won't look at anything that small but would typically get interested in something like BT and VMO2 announcing thet they want to merge.

[unisoft]

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@Roger_Gooner wrote:

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@unisoft wrote:

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@Roger_Gooner wrote:

The reason for buying an altnet is to get your hands on its subscribers and its network of cabinets, ducts, cables and ONTs. If this makes commercial sense, like the price is right, then VM will do so. How else do you think NTL and Telewest got to be the last two big cablecos standing?

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I'd rather another bigger ALTNET buy them than VM. Its anti-competitive if BT or VM buy them. Just my view in a democracy.

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How can this have anything to do with democracy as nobody votes for this kind of thing. There would also be no problem if VM were to buy Trooli whose build share of the market is a mere 5%. The Competition and Markets Authority won't look at anything that small but would typically get interested in something like BT and VMO2 announcing thet they want to merge.

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The point is, they do it for reducing competition in the market. Aware Trooli is too small but it doesn't always stop at just Trooli either. Less competition and back to the two horse race again, neither that competitive. Even if they eventually do wholesale access, it doesn't mean cheaper if the wholesale costs still increases madly every year as everyone operating on it has to pass it on.