Telco industry analysts and scribes in Australia woke to news this morning of yet another major merger - this time, Vocus and M2.
We were not in the least surprised, with both of those companies having very aggressively targeted growth in recent times through mergers and acquisitions. Vocus, for example, has only recently completed its merger with Amcom, which saw those two companies join the billion dollar club on the Australian Stock Exchange. And now, in what seems to be the blink of an eye, Vocus and Amcom will be key parts of what is set to become the 4th biggest telco in Australia.
As significant as the announced merger is for the Australian telco market, we will not be surprised if a far more significant merger takes place in the very near future. Like Vodafone and TPG walking down the aisle.
To our mind, the biggest loser from the recent (and ongoing) industry consolidation is Optus. TPG's acquisition of iiNet put Optus into the shade in the fixed line broadband market, the Vocus and Amcom tie-up already threatened Optus' position in the enterprise and government market and now, a supercharged Vocus / Amcom and M2 will pose an even more serious threat to Optus in a swathe of markets. And while Vodafone has not yet pulled the trigger on a major acquisition or merger in Australia, Vodafone's deep pockets and renewed vigour are hurting Optus - big time.
Optus needs to do something major, fast and bold to reclaim a position of influence in the Australian telco market. Base level 'strategies' of deep discounting, throwing dollars at customers and eroding margin to chase acquisition won't get it done. Optus needs to act to shift the market. And that will take a major acquisition or merger, involving many hundreds of millions (or more likely, billions) of dollars.
Find your courage Optus and make it happen. In the words of Donald Trump, "Nothing is easy, but who wants nothing?".