Telstra Completes SkyNetGlobal Transaction

By Craig Liddell

January 13, 2003

Called 'a milestone for the Australian Wi-Fi market,' the ink is now dry on Telstra's contract to acquire SkyNetGlobal's assets.

Telstra first announced the decision to acquire SkyNetGlobal's 50 hotspots for $3.3 million in August last year. The wireless provider now has access to 660 hotspots in 10 countries.

The deal is two fold. Telstra has agreed to purchase SkyNetGlobal's public access wireless LAN (WLAN) infrastructure. Secondly, a roaming agreement means SkyNetGlobal's customers will be provided with Internet access via the WLANs owned and operated by Telstra and vice versa.

"Completion of this transaction marks a milestone for the Australian Wi-Fi market as it will allow Telstra customers to have secure, high-performance access to the online environment, principally through their WLAN-enabled notebooks and PDAs," says Ted Pretty, Telstra group managing director, consumer and marketing.

SkyNetGlobal will now shift from an infrastructure to service provider model, a plan announced to the market several months ago. "SkyNetGlobal can now put 100 per cent focus on servicing and building its customer base," says CEO Jonathon Soon. "Our customers will have continued access to all network sites, including Qantas Clubs and Rydges Hotels, involved in the sale through a roaming agreement that we have signed with Telstra."

Petty says Telstra will now upgrade security and network performance at all sites.

SkyNetGlobal is one of the hotspot pioneers having begun late in 1999. Launching the first access location at Darling Harbour, Soon predicted an era of ubiquitous connectivity. "In the future getting online won't be important, what will really matter is where you can access your email, company LAN and the Internet."

"We have a solid product that is in strong demand from a rapidly growing target market and a realistic, achievable network roll out plan," he added.

One year later, the company secured $AU 6 million in an oversubscribed initial public offering (IPO). Asian investors bought half the shares on offer.

Early in 2002, a private placement contributed another $2.5 million to the company's coffers.

All funds were raised from existing shareholders, including $200,000 from Sooncorp, a company owned by Soon.

Telstra also secures WLAN assets at Rydges Hotel sites in Australia and New Zealand. The incumbent telco has paid almost $1 million to date with the balance of approximately $2.4 million to be paid over the next two years.

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