Axia NetMedia chairman and chief executive Art Price (right) with Vodafone NZ chief executive Russell Stanners. Vodafone supported Axia's failed urban broadband bid - but also maintained lines of communication with other contenders. Telecom – i
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Axia NetMedia chairman and chief executive Art Price (right) with Vodafone NZ chief executive Russell Stanners. Vodafone supported Axia's failed urban broadband bid - but also maintained lines of communication with other contenders.
Telecom – in stark contrast to its urban fibre woes – now looks to be in the cat-bird seat for the government’s $300 million rural initiative.
Its only serious rival has dropped a strong hit it will drop out of the nation bids-only tender to extend broadband beyond cities.
Yesterday Canadian fibre operator Axia NetMedia was knocked out of the government’s urban-focused ultrafast broadband (UFB) tender.
Ignominiously, it was the only bidder - of 15 contenders - not to make the shortlist.
Last night, chairman and chief executive Art Price said his company was now “evaluating whether Axia’s continued participation in the Rural Broadband Initiative competitive bid process is worthwhile.”
The rural bid had cross-over elements with Axia’s urban fibre bid, meaning a standalone rural bid could be impractical.
Rural broadband bids close in November.
On August 26, the government has narrowed the rural broadband tender process to national bids only.
Many commentators thought that by shutting the door on regional bidders (unlike the urban fibre project; the UFB), the government had effectively turned the tender into a two-horse race between Telecom and Axia (although Vector still sees an angle for a co-operative lines company bid).
If that theory is correct, then Telecom is now in the cat-bird seat for the rural broadband scheme (in stark contrast to its urban fibre complications yesterday).
Chance to avoid earnings hit
A Telecom rural fibre win would be good news for shareholders. The company has formerly told the NXZ that rural telecommunications funding changes would cost it $56 million in ebitda in each of its its 2011, 2012 and 2013 financial years – but the picture will not be nearly so grim if Telecom wins the new, contestable rural broadband fund (which replaces the TSO Levy, which was paid directly to Telecom, uncontested).
Axia was one of two bidders who had placed a nationwide pitch for all 33 Crown Fibre regions (the other was Telecom).
Vodafone support
The UFB Axia bid was supported by Vodafone, albeit tepidly (Vodafone is alsolisted as a rural broadband bidder; again presumably in partnership with Axia).
Vodafone NZ chief executive Russell Stanners said his company would consider a minority investment if Axia won the tender. It would also likely be an Axia retail customer - but Mr Stanners added he was talking to all bidders, and his company would shop around for the best retail deal.
Mr Stanners assertion that a fibre roll-out would cost $10 billion, and that the government would have to chip in $5 billion to make it happen, was likely not 110% helpful to the Axia cause, and its arguments about cost-effectiveness.
CFH - staying mum
Crown Fibre Holdings chairman Simon Allen said yesterday, in a statement, that Axia’s bid “included certain elements that were not part of the government's UFB policy.”
Mr Allen wouldn’t comment any further on Axia, citing the commercial confidentiality of the bid process when NBR enquired.
Previously, Axia chairman and chief executive has said he would like to see a fibre network built by his company also handle all backhaul for Telecom, Vodafone and 2degrees; an element outside the UFB’s parameters.
Axia also lost out in the Australian government’s national broadband network, but has won key Crown fibre contracts in Singapore and France.
