Household brands could be NBN retail service providers

New Vocus chairman sees opportunity in helping manage the network for potential NBN retail service providers

Vocus Communications' new chairman, David Spence, has flagged the emergence of retail service providers on the National Broadband Network (NBN) as a growth opportunity as the company moves to list on the ASX.

Yesterday it was announced, Vocus Communications had been sold to an ASX-listed private equity firm for $20 million.

Vocus shareholders will receive a cash payout and ordinary shares in the Investec Wentworth Private Equity managed First Opportunity Fund (FOF).

However, Vocus shareholders will retain control of the company with Spence, the former Unwired CEO becoming chairman after stepping down from his responsibilities with the ISP in February.

The company will be renamed Vocus Communications Limited and will now be listed on the ASX. It will also seek $6 million in additional capital through a share raising and IPO underwritten by Investec.

A prospectus for the IPO is expected to be available in the next four to six weeks with the company listed on the ASX by mid-June.

“Vocus has been one of the fastest growing young companies in this space and this is the time to take it to the next level,” Spence told Computerworld Australia. “We certainly see a tremendous opportunity for us in the future not only to grow from within the company but also if any acquisitions make themselves available, being publicly listed will certainly help us.”

Vocus most recently reported $947,000 profit before tax for the 2009 financial year and is forecasting this to rise to $4.39 million this year. Despite Spence’s own retail experience Vocus is not looking to go down that path.

“I don’t think we will move into the retail area ourselves, what we will really look to do is support the growth of the retail service providers as they come onto the NBN. As the market changes we are starting to see all sorts of companies pop up as potential retail service providers or application providers, even device providers. All of them need someone to manage the network behind the devices or the applications. I think Vocus is ideally positioned in the Australia and New Zealand markets to be that provider of expertise,” Spence said.

Similar to the way credit cards are now offered by retail outlets, airlines and other corporations the NBN will result in a variety of companies offering a range of services and not just Internet access, Vocus CEO James Spencely said.

“The thing that is required is someone who is willing and able to supply the network in the background,” he said.

The Vocus positioning on the NBN echoes several previous comments, for example by long-term Melbourne University telecommunications professor and former Bell Labs employee, Rod Tucker, who said late last year that with the NBN being based on a future-proof fibre-to-the-premises (FttP) network the roll of ISPs will change and along with it the way we refer to them.

“I think we might not be calling them ISPs, they’ll just be service providers. The role of the service providers will change,” he said at the time. “The beauty of the NBN, I think in the way it is being envisaged, is the wholesale platform with the retail services on top of it means there is virtually infinite opportunities for competition and different services to co-exist.

“At the moment you could churn from one ISP to another. The potential is that you could sign up to services on demand when you want them and turn them off and get a different service from a different provider at a different time. There will be much more flexibility.”

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