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Uecomm and Western Power Form Strategic Relationship
Uecomm Ltd and Western Power Corporation (WPC) announced today that they have formed a strategic relationship for the provision of fibre broadband services to the Perth marketplace.
Uecomm will sell its existing Perth fibre network to WPC while retaining ownership of the switching equipment. Uecomm will have the right to use capacity on the network in addition to having the exclusive right to market and sell telecommunication services to the corporate, wholesale and government markets in Perth, Western Australia.
Uecomm Chief Executive Officer, Mr Peter McGrath said that the agreement with Western Power was an excellent solution for both companies. "Uecomm is committed to the Western Australian market and this initiative will enable us to focus on sales and marketing efforts in the state. The agreement provides the foundation for Uecomm to deliver on a number of initiatives and ensures continuity of service to our existing customers in Perth.
"Western Power is a substantial Perth based company with extensive statewide facilities and is the ideal partner to manage the ownership, maintenance and future expansion of the fibre network," he said.
Western Power spokesman David Martin, said the company's primary application would be to use the fibre network to support the control of the electricity network. "Western Power uses telecommunications facilities to control and monitor the power system and to date this has been through a mix of carrier services and Western Power's own telecommunications assets," he said.
The key elements of the transaction, subject to a number of conditions being satisfied by both parties, are as follows:
Uecomm will sell the Perth fibre network to Western Power for $5.14 million. The purchase will comprise a cash consideration of $3.64 million consisting of an up front amount and deferred payments over a three year period. In addition Uecomm will receive further benefits totalling $1.5 million, in a combination of cash and non-cash benefits.
Uecomm will be granted the long-term right to use substantial capacity on the network. Fees for this right of access will be capped for up to three years.
Uecomm will have exclusive rights to market and sell services from the network to the corporate, wholesale and government markets for minimum period of three years.
After recognising the considerations outlined above, the accounting impact for this transaction will result in a loss of approximately $7 million before tax.
