Amcom trade halt pending statement
Sydney Morning Herald
Saturday February 6, 2010
AMCOM Telecommunications went into a trading halt yesterday "pending the announcement of a proposed transaction" but it would not reveal any further details.The corporate services provider, which raised $25 million last month, is due to make an announcement by Monday.It may not be a coincidence that the news follows a doubling in the company's share price over the previous six months and came a day after a significant court win by iiNet, the consumer broadband provider of which Amcom owns 23 per cent."Clearly there's been some buying already," the BBY telecom analyst Mark McDonnell said of the stock, which was fetching 31.5c before the trading halt, compared with a low of 10c this time last year."Amcom's own business has very strong underlying growth," Mr McDonnell said, but he did not rule out the iiNet stake being the focus of any transaction.Telecom Corp of New Zealand, which already owns 18.25 per cent of iiNet via its subsidiary PowerTel, could acquire a controlling stake if it buys Amcom's share.Such a deal would look more enticing after iiNet won its legal battle with the Australian Federation Against Copyright Theft over the illegal downloads of music and movies by customers on its network. The case had the potential to cripple iiNet, which argued it should not be responsible for policing its customers over their downloads.However, Mr McDonnell cautioned against the likelihood of Telecom NZ moving on iiNet given its heavy capital expenditure at home on 3G and fibre optic networks. Its new chief executive, Paul Reynolds, is reluctant to spend more on the other side of the Tasman.But an acquisition of Amcom could spell the end of its association with iiNet in any case.Amcom's stake in iiNet is a legacy of its time under the influence of Futuris, which has since sold its half share of Amcom. The stake is too small to offer any control of iiNet and offers little scope for synergies as the telcos operate in different markets.
© 2010 Sydney Morning Herald
