Anon | reply to deakon
Answers to Lots of questions
The deal makes perfect sense just not sure about the price.
1. DirecTV has 8 million subscribers currently. I there 800 seat call centers can handle Telocity's 30K subs and next years new adds. New adds will come from DirecTV's base. Look for Telocity to stop the cute advertising in the short term.
2. DirecTV/Hughes had been looking at DSL for quite a few months, 6+, to combat churn to cable's integrated package so an aquisition shouldn't have been a suprise to any industry insider who really knows what is going on. They didn't buy a CLEC because of the EPS impact it would have to the Hughes bottom line (same reason why Verizon killed their deal with NPNT). I don't see anyone buying any CLEC anytime soon, buyers will just wait for the asset liquidation sales in Chp. 11 and buy DSLAMS and Colo space at pennies on the dollar. Remember CLECs are really glorified resellers too, they resell the most important piece, the copper loop. Only the ILEC is in complete control.
The real question people should be asking is why did Hughes pay such a premium for Telocity? I take my hat off to Telocity's bankers for negotiating a great deal. Hughes' board must not watch CNBC or read DSL Reports.
3. Watch for an integrated DirecTV/DSL/Cable modem set top box. The box will have a 40-80G hard drive and serve as a home LAN server/cache. Multiple connections via home pna/wireless 802.11
4. Just another line item on the bill to DirecTV. Your not considering economics of reduced churn by offering a combined package.
The REAL QUESTION PEOPLE SHOULD BE ASKING IS WHAT'S NEXT, I.E. WHO DOES DIRECTV/TELOCITY GO WITH IN TERMS OF A CLEC RELATIONSHIP (NPNT or RTHM). I placing my bets on RTHM in the short term. I would short NPNT if you still can.
Remember it can, and probably will, go to zero. |
