Uniti Group gets set for separation

Uniti Group managing director and CEO Michael Simmons

Australia’s competition watchdog is calling for industry feedback on the proposed joint functional separation of Uniti Group.

Under new provisions introduced by the Telecommunications Legislation Amendment (Competition and Consumer) Act 2020, network operators are now able to voluntarily submit functional separation undertakings to the Australian Competition and Consumer Commission (ACCC) for approval.

The legislative reform package was broadly intended to promote competition and to improve access to broadband services for all people in Australia, especially those living in regional, rural and remote areas.

Under the amendments, carrier separation rules require controllers of a line capable of supplying superfast carriage services to residential customers to supply wholesale access on non-discriminatory terms and either be structurally separated or operate according to a functional separation undertaking, unless they are covered by certain exemptions.

Among other provisions, it amends the Telecommunications Act 1997 to enable superfast fixed line broadband networks serving residential customers to operate on a functionally separated basis, rather than a structurally separated basis. 

This means that companies providing wholesale broadband infrastructure services to retail service providers (RSPs) can also sell services directly to consumers without having to undergo a hefty structural separation process.

Amendments to the carrier separation rules commenced on 26 August 2020. As such, network operators are now able to voluntarily submit either standard functional separation undertakings or joint functional separation undertakings to the ACCC for approval. 

From the ACCC’s perspective, this is intended to provide greater commercial flexibility for superfast network operators and promote infrastructure-based competition.

Now, the ACCC has released a consultation paper seeking stakeholders views after receiving a voluntary joint functional separation undertaking by Uniti Group.

Uniti first flagged the proposed undertaking in its FY20 results presentation in August. 

“Uniti notes that the ACCC has indicated in its consultation paper that it is minded to accept Uniti’s Undertaking, subject to taking into consideration stakeholders’ views on the submission,” the telco told shareholders following the release of the ACCC’s discussion paper.

Submissions are due by 30 September 2020.

The move comes as Uniti Wireless’ proposed acquisition of Opticomm comes under threat as a super fund puts $100 million more on the table for the wholesale network infrastructure operator.

First State Superannuation Scheme made an offer of 100 per cent cash at $5.85 per share for Opticomm, a value of $608 million.

This significantly outbids Uniti’s June offer of $507 million, which consisted of $407 million cash and 84 million Uniti shares, based on the price of $5.10 per share.