news Australia’s number two telco Optus this morning revealed it would buy wireless broadband player Vividwireless from its parent the Seven Group, for a total cost of $230 million, in a move which Optus said will birth a new 4G mobile broadband network in Australia.

Much of the asset base of Vividwireless is believed to have come from Unwired, which was acquired by Seven for about $127 million in late 2007, as its plan to conquer Australia’s mobile broadband market through using the burgeoning WiMax standard was rapidly coming undone through the encroaching popularity of third-generation mobile broadband networks launched by companies like Telstra, Optus and Vodafone. It had previously counted chip giant Intel among its investors.

In a statement released this morning, Optus said the deal would eliver it access to up to 98Mhz of wireless spectrum in the 2.3GHz band — a band which was already used by “some of the world’s leading operators” to provide 4G services. 4G is a term used to describe the next generation of wireless broadband services, which will allow speeds up to levels such as 100Mbps — far beyond the current generation of 3G services.

Optus said it planned to use this spectrum “to build a new 4G network using LTE-TDD technology”.

“This new network will deliver wireless broadband to households and businesses in metropolitan Australia, with typical download speeds ranging from 25Mbps to 87Mbps — twice as fast as existing competitive 4G services,” said Optus. “It will be integrated with Optus’ 1800MHz network, which will be launched in Newcastle and the Hunter region of NSW in April 2012.”

Paul O’Sullivan, Optus Chief Executive said: “The acquisition of Vividwireless will give Optus a significant increase in network capacity to address the next wave of data growth that is just around the corner. By integrating it with our current 4G rollout (in the 1800MHz band), we will be able to provide increased mobile speeds to our customers in metropolitan Australia.”

“Optus was born out of a desire to provide choice and competition to Australians for telecommunications services. Today’s announcement demonstrates our commitment to being a leader in 4G and in providing Australians with a range of high speed mobile services. This is an important step in our vision to lead the industry in customer experience by delivering relevant content and applications anywhere, on any device,” O’Sullivan said.

Peter Gammell, Chief Executive Officer of Seven Group Holdings said: “We are proud of our achievements with Vividwireless. For Seven Group Holdings this sale recognises value for the investment we’ve made in Vividwireless. Optus’ expertise will allow the business to grow into the future and take the pioneering work we’ve done in 4G to the next level.”

The acquisition includes the transfer of Vividwireless’ operating businesses, customers, spectrum licences and existing wireless broadband network. Optus will also need to pay a substantial fee — estimated at $50 million — to the Australian Communications and Media Authority for the reissue of the spectrum. In a separate statement, Optus parent SinTel said the consolidated net asset value of Vividwireless based on its 30 June 2011 financial statements was approximately $11 million.

Vividwireless will continue to provide services to its customers with Optus planning to migrate customers to the upgraded LTE network as rollout progresses.

In a later statement issued by an Optus spokesperson in reply to questions from Delimiter, the company said that Vividwireless will continue to provide services to its customers post the acquisition, with Optus planning to migrate customers to the upgraded LTE network as rollout progresses.

With respect to the issue of whether the new 4G network will be data-only or will also support mobile telephony, the statement said: “Like all current 4G networks it will initially be a 4G data network but we expect a rich ecosystem to develop with a variety of devices like smartphones etc being available.” The company noted that customers will be able to access both the 1800Mhz and 2.3Ghz spectrum bands, referring to the “integration” part of its original statement. Network vendors for the planned 4G rollout had not been finalised, as the Vividwireless transaction had not been completed, they said.

The news comes as rival telcos Telstra and Vodafone have also been developing their 4G offerings. Telstra has already launched its fledgling 4G network in CBD areas, while Vodafone is still testing its offering in certain regions.

opinion/analysis
This acquisition appears to be almost purely about access to spectrum — spectrum which Optus needs to build out its 4G network and compete with Telstra. Vividwireless (and Unwired before it), was broadly unsuccessful in its business model of launching fixed wireless broadband services in Australia, and while the company has some customers, it’s not building any scale at any speed. The existing 3G mobile broadband networks have simply offered too much competition for the company to grow at any decent rate. It had to die at some point and this looks like that point.

In addition, with this acquisition, it appears as if Optus has finally been able to convince its parent SingTel to unlock the purse strings for Australian acquisitions, if only in its core mobile market. This bodes well for Optus — it indicates that the company is becoming more flexible. Optus missed the acquisitions of AAPT, Internode, TransACT and more in the fixed broadband market. It can’t afford to keep doing so. Perhaps we’ll see a more active Optus in the near future.

On a final note, I must add that I am disappointed that Optus didn’t hold a press conference this morning to announce the Vividwireless acquisition. In years gone by, for major company moves like this, Optus CEO Paul O’Sullivan would have fronted journalists and taken questions on the issue. Today, all we have is a brief media release issued unexpectedly in the dead of Monday morning. As a company, Optus is gradually becoming less transparent over the years, and that’s not a good thing.

Image credit: Optus

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1. Daniel
   Posted 20/02/2012 at 11:39 am | Permalink | Reply

   I seen this coming amile away Optus.
   Now Optus tell the pubic you have vendors in BTS hardware.?

   • Renai LeMay
     Posted 20/02/2012 at 4:09 pm | Permalink | Reply

     What does BTS stand for?

     • Ian
       Posted 20/02/2012 at 4:30 pm | Permalink | Reply

       Base (Transceiver) Station. The electronics that go with a tower.

     • Daniel
       Posted 20/02/2012 at 6:20 pm | Permalink | Reply

       @Renai LeMay Optus seem to have dumped NSN (nokia siemens networks) in flavour Huawei in rolling out SingleRan BTS gear.

2. Ian
   Posted 20/02/2012 at 1:01 pm | Permalink | Reply

   So Optus are doing FD-LTE at 1800MHz and 700MHz, and now they’re doing TD-LTE at 2300MHz as well? At least they’re not putting all their eggs in one basket, I guess.

   Good luck buying a device compatible with all three networks though.

   • Renai LeMay
     Posted 20/02/2012 at 4:10 pm | Permalink | Reply

     It is quite weird … but then Telstra attracted similar comments when it picked 850MHz in 2005. That’s why I’m waiting to see what happens here before I judge Optus too harshly ;)

3. nonny-moose
   Posted 20/02/2012 at 2:04 pm | Permalink | Reply

   its a bit confusingly written but if the Vivid network is TD then it would be kind of difficult to integrate “with Optus’ 1800MHz network, which will be launched in Newcastle and the Hunter region of NSW in April 2012.” if that network is FD.

   from one of the other stories about on the development, i think the plan is that vivid customers will be migrated over to Optus 4g services which suggests to me the vivid hardware wont be reused and the spectrum used to augment the existing 4g services. thats the kind of integration im expecting.

   whatever winds up happening, its a fairly big slab of spectrum, i dont know if its contiguous or whatever but going by the 4g trial reports ive seen so farit would pretty much work out to 4 20Mhz channels with either a small between channel buffer or the last 16 Mhz subdivided in some fashion. thats in addition to LTE spectrum Optus already hold. the purchase makes absolute sense as the speed you get on a 4g service has a direct relationship to how much spectrum is in the slice the tower/carrier affords you – one of the trials i recall had slices from 5 through 10 and up to 20 with the best throughput figures in the order of 40 mbit using the 20Mhz slice. might have been the Telstra trial….

   At any rate id suggest Optus seem to be gearing up to take on Telstra, having learned something from the way Next G ran away with the show due to speed and coverage, they wont want a repeat so the next generation of mobile services is likely going to be an interesting one to watch. if they are really going on the acquisition trail thats just more reason to be watching.

   • Mathew
     Posted 20/02/2012 at 3:56 pm | Permalink | Reply

     Vivid effectively has the entire 2.3GHz band to itself, plus the 3.4GHz used for Unwired.

     No reason why FD and TD can’t be run together, there is already a network in Poland with both. And Sprint and Clearwire in the US will be doing the same. Vivid is currently WiMAX but their Huawei base stations can be upgraded to TD-LTE

     • nonny-moose
       Posted 20/02/2012 at 6:21 pm | Permalink | Reply

       ahhh dint know about the Polish example. id thought it was a bit of an either or thing, but if they can coexist happily thats likely too. i did suspect that similar basestation hardware allowing an upgrade was a possibility too, forgot to mention earlier. That sort of deal certainly worked for Internode and iiNet, so its clear this has left Optus with a few ways to jump. mind you i would have thought a network with both TD and FD elements would have been more complicated to run, which is why i initially thought it was a pure spectrum play. having most of a band to itself is a pretty strong position to hold.

4. FREDDY
   Posted 01/03/2012 at 9:38 pm | Permalink | Reply

   does this mean optus will get rid of vivids plans?

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