Commander has acquired an 80 per cent stake in Personal Broadband Australia (PBA) in a bid to establish itself as a wireless broadband player. The communications integrator has paid $5 for the issued capital, as well as $1 for $18 million in secured convertible notes. It will invest a further $15 million of working capital into the mobile broadband carrier.
Commander will also have the opportunity to acquire the remaining 20 per cent stake in PBA - currently retained by company managing director - Jim Cooney, in three years.
Cooney, who has been a director at the company since mid-2002, took up the post in January last year after injecting $12 million of investment funding into the organisation.
According to an ASX statement, the decision to buy into the wireless broadband provider would allow Commander to enhance its notebook offering with high-speed, mobile broadband access.
The integrator is also working with Kyocera to develop and commercialise a program to enable existing and new customers to directly link to its IP network over the iBurst wireless infrastructure.
As part of the transaction, Kyocera has agreed to defer payments due from PBA, which will be subject to new technology developments, including delivering voice over the wireless network.
The acquisition is part of a wider broadband access strategy, which will be unveiled by Commander in August, the statement read. It would allow the integrator to bundle data products and services specifically for the SME market, as well as branch into ASP-related services. PBA began providing high-speed Internet access based on iBurst technology in Sydney. The company has spent about $65 million developing its service in total, and now boasts of a presence in Melbourne, Brisbane, Canberra and the Gold Coast.
Original stakeholders included iBurst creator, ArrayComm, as well as Kyocera and Mitsubishi Corporation.
The service is resold through several ISPs and integrators including OzEmail, Optus, Chilli Internet Solutions and Veritel. It is also offered as a bundled product with NetComm modems in Harvey Norman stores.
Joint iiNet and OzEmail CEO, Michael Malone, said the acquisition was positive for the future of PBA and for its wholesale customers.
"It is good news from the point of view of a wholesale customer in that it gives PBA credibility and sustainability," he said. "From a PBA point of view, it will be useful to have access to Commander's customer base, which is an exceptional list of SME and larger businesses.
"Commander has shown in the past that it can bundle complementary services together extremely well."
IDC research manager for wireless and mobility, Warren Chaisatien, said the integrator would be beneficial to the wireless broadband carrier's long-term survival by providing a much needed investment boost for network infrastructure deployment.
"It is an aggressive move for Commander," he said. "Wireless broadband has a bright future - but it is taking a lot of responsibility in terms of injecting more cash and expanding the PBA network."
Chaisatien said the capital injection followed news that rival provider, Unwired, was also on the hunt for $100 million to fund new technology rollouts.
All wireless operators who had started as niche start-ups were also at risk of being unable to compete against the larger ISPs as wireless broadband became a mainstream product, he claimed.
"We are at a critical juncture," Chaisatien said. "In the longer term, wireless broadband specialists will either consolidate and merge together, or become part of a larger telco company."
ACCC broadband snapshot figures
New ACCC figures report total broadband take-up in Australia hit 1.8 million on March 31.
Broadband sign-ups have increased by 121.8 per cent, or just over 1 million users, over the past year. This spike coincided with the introduction of Telstra's $29.95 ADSL service in March 2004.
ADSL continues to attract the most broadband subscribers, accounting for nearly 1.3 million users.