One.Tel demise to spark telco consolidation

As the fallout of the One.Tel fiasco hits home, junior telcos will become increasingly vulnerable to the continued consolidation occurring within the sector, according to industry analysts.

The industry has already seen AAPT join forces with Telecom NZ and Hutchison Telecommunications (Australia) join forces with its parent company Hutchison Whampoa and Telecom NZ to launch its third-generation wireless (3G) services.

Geoff Johnson, research area director, enterprise network strategies for Gartner Asia Pacific, said One.Tel was always on the map for consolidation.

However, any plans to save the company now seem slim following the administrators Ferrier Hodgson's announcement that One.Tel has 21 days to find buyers for its businesses, or close.

The administrator said it had concluded that One.Tel owes $600 million and could not survive in its present state.

Peter Lemon, senior analyst, Internet services and communications for IDC, said he thought Hutchison would have made a move to buy One.Tel.

"I thought it would have been a discussion point at least, but this has probably stalled due to Optus and Telstra grabbing all the customers. Also [One.Tel] has the wrong sort of customers for what they are trying to achieve and it is probably the wrong time for them."

Joel Martin, research manager for IDC, said to survive, the telco would have to become a different company and go back to specialising in the international call area.

Martin said he believes One.Tel's plummet will bring on a consolidation within the industry, with carriers reduced by half.

"One.Tel was just the first cab off the rank. There are a lot of wholesale carriers in the market and I believe they will be next."

"They should be looking at where their revenue is coming from and who they can partner with."

Martin said he believed some interesting partnerships will come up, but he was not at liberty to discuss them as yet.

Despite One.Tel's failure in the marketplace, Martin believes the company has given a lot back to the public.

"Their initiatives were very beneficial to the market on the whole. They organised a program that changed international and mobile rates."

Lemon agrees, he said the margins of the established telcos were driven down and the price pressure within the market was removed.

"Businesses now have a better picture of what they want from carriers and what carriers have to do to get their business," Martin said.

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More about AAPTFerrier HodgsonGartnerHutchisonHutchison Telecommunications (Aust)Hutchison WhampoaIDC AustraliaOne.TelOptusTelstra Corporation

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