Telecommunication company Davnet Ltd. has pulled out of the broadband services market with the $16 million sale Monday of its operating subsidiary Davnet Telecommunications Pty. Ltd. (DavTel) to NTT Australia Pty. Ltd.
Davnet, which in its heyday offered broadband services in Australia, Singapore, Hong Kong and Canada, was forced into the sale after incurring heavy recent losses, combined with the failure of funding negotiations with a group called The Investment Company of China.
"The overseas operations have all been closed and DavNet's 51 percent share in DavTel has been sold to NTT," company secretary Mark Hubbard said.
NTT already owned the other 49 percent of DavTel.
DavTel is Davnet's major asset, and so the sale requires the agreement of Davnet's shareholders at a general meeting in January. As NTT Australia is a subsidiary of Japan's NTT Communications Corp., the sale must also be approved by Australia's Foreign Investment Review Board, which monitors takeovers by foreign companies of Australian companies.
Australian Stock Exchange-listed Davnet now only operates data storage services company e-Datagroup, according to Hubbard. The company offers services in the data management, access, protection, storage and services area.
Davnet is the second Australian telecommunication company to leave the market this year, after the May collapse of OneTel Ltd. Independent analyst Paul Budde has repeatedly warned that Australia's telecommunication market is returning to a state of near-monopoly as smaller players find it increasingly difficult to survive.