Friday, January 12, 2007

Telstra pushes out resellers ....

The Austrlaian reported today that the Australian mobile telephone retailer Gap Telecoms has been placed into administration. The fate of the reseller for telco Singtel Optus is symptomatic of the trend in the sector, worth $A11bn per annum. Already, major Telstra affiliate Fone Zone Limited (ASX:FZN) had been forced to issue a profit warning, and a number of store owners also linked to Telstra are placing their businesses on the market due to what they see as unfair price pressures being exerted by the company.

Specialist law firm Lockwood Marks is also handling a larger volume of complaints by the resellers. A major problem is the market penetration of mobile handsets of close to 100%.

Here is an interesting article that fundmental analysts should take note. It points to major issues with resellers (and in my opinion this will lead to consolidation) and it also points to Telstra pushing its market dominance. This should put on a light globe pointing to a possible competitive advantage that Telstra may be able to use in the future. The Government is not stepping in and neither are any regulators. Worth Watching ...

Good Luck Investing.

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