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Telecommunications iiNet makes $15M DSLAM gamble
Telecommunications iiNet makes $15M DSLAM gamble | iiNet makes $15M DSLAM gamble |
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| by Stuart Corner | |
| Thursday, 09 March 2006 | |
  
iiNet has announced plans to install a further 150 DSLAMs giving it access to 90 percent of the metropolitan population, and to backhaul these with its own dedicated fibre links, to be supplied by Pipe Networks.iiNet has recently installed its 200th DSLAM,in Queanbeyan, and says the additional installations will enable it to deliver ADSL2+ services to up to four million households, at up to 24Mbps for those closest to the exchanges. Ericsson is its DSLAM supplier. It has given no timeframe for the rollout. However Pipe Networks has indicated it will have the fibre links in place by July. CEO, Michael Malone, said the contract with Pipe Networks would deliver "lower cost backhaul transmission, with unlimited bandwidth for a fixed price, and significantly increased capacity for future bandwidth demand." Pipe Networks' managing director, Bevan Slattery, said: "This contract is executed over 10 years and represents a cornerstone in our investment philosophy of ensuring customer contracts are in place before significant investment in new dark fibre capacity is made. A key driver of revenue for the company is the length of fibre optic cable and utilisation of that cable to determine the capacity available for sale. "Due to this contract, the expected growth of our fibre optic network will be significantly accelerated such that our core network will grow from 170,000 metres at the end of December 2005 to over 400,000 metres by July 2006 while utilisation rates will remain constant. "This represents a significant opportunity to sell further services earlier than previously expected as this capacity was not expected to available for sale until the second half of the 2007 financial year." The move for iiNet represents a huge gamble on two counts: the price of the ULL it needs to connect customers to its DSLAMs is under review, and a large scale rollout by Telstra of FTTN could greatly reduce the addressable market on each DSLAM if Telstra decommissions the copper serving outlying customers served by the new fibre nodes. In an investor presentation this week to Euroz Securities' Mid Cap Conference, iiNet maintained earlier statements that it is factoring in a $22 per month ULL charge, the current urban rate. Telstra has increased this to $30, but the price remains subject to review by the ACCC. In that presentation iiNet gave one example to illustrate available bandwidth to customers. From the Riverton exchange, it claimed 50 percent would be able to get rates above 9.1Mbps, 75 percent above 5.5Mbps and 90 percent above 3.4Mbps. iiNet reported revenues of $120 million for the six months to 31 December 2005 with EBITDA of $16.4 million and NPAT before amortisation of $6.0 million. Guidance for the full year is $247m, $40.1m and $13.6m respectively. It presently has 174,000 DSL customers, 85,000 on its own DSLAMs and 80,000 telephony customers. Total customer numbers are 690,000. |
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