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Telstra to invest $50m in partnership with Fetch TV; eyes 51% stake

Telstra has entered into an agreement with Fetch as its new platform for Telstra TV and to evolve Telstra’s home and entertainment proposition.

Telstra group executive of product and technology, Kim Krogh Andersen, said: “Telstra TV launched in 2015 with a focus on bringing together a wide range of streaming services for our customers and today has around 800,000 active subscribers, operating on the Roku platform.

“Telstra TV has been successful and popular in Australian homes as it provides a simple way to discover and watch content from streaming services and free-to-air, and is a key platform for Foxtel streaming services, Kayo, Binge and Flash,” Krogh Andersen said.

“While the current Telstra TV product remains popular, the underlying technology platform needs to evolve to support a deeper level of engagement through content offers, account management and rewards through Telstra Plus. It also needs to support future entertainment options and be delivered via the hardware options customers
want including Smart TVs,” he said.

“After a strategic review of our options, we have selected Fetch TV for its ability to deliver this functionality at scale for our customers, given Fetch’s software development capability, innovative roadmap and strong track record delivering capability for other Australian telco partners.

“Becoming a trusted partner in the home remains an important growth opportunity for Telstra. As homes become more digitally connected, the integration of that technology – including the Smart Modem, smart meter and a platform for streaming media which can also be used for AR, VR and the metaverse – will become even more critical. While they all do different things, if they can work together seamlessly, it will help enable customers to get the most out of their connectivity. That’s why Telstra is investing in an ‘open’ technology platform and for us to have access to an onshore team who can deliver on a relevant product roadmap for Telstra and telcos,” he said.

The deal will see Telstra invest around $50 million including provision for onboarding Telstra TV customers onto Fetch. This will result in Telstra acquiring a 51 per cent stake in the company, at a valuation of around $100 million.

Fetch TV CEO Scott Lorson said: “Fetch has achieved scale and profitability on the back of a compelling proposition and distribution partnerships with leading Australian telcos and retailers. With Telstra on board, Fetch is now well placed to deliver a home and entertainment proposition with the scale to enable us to partner with global content and streaming providers.

“This investment from Telstra will allow Fetch TV to accelerate growth and deliver a genuinely competitive Australian home and entertainment solution. Fetch has a hard-earned reputation for localisation, innovation and partnership, and today’s announcement will ensure a bright future for our subscribers, content partners, our
emerging advertising partners and, importantly, for our telco and retail distribution partners,” Lorson said.

Fetch TV will continue to operate standalone with Telstra as a majority shareholder. Fetch TV’s incumbent shareholders, Astro Holdings, will retain a 49 per cent share in the company. Telstra will consolidate Fetch TV’s accounts post completion. It generated $10 million in earnings (before interest, tax, depreciation and amortisation) last financial year.

Telstra TV as a product continues in market, however services will be progressively migrated to the Fetch TV platform.

Fetch TV  has approximately 670,000 active subscribers through its Australian Retail Service Providers (RSP) relationships including Optus, iiNet, Aussie Broadband, Primus and Dodo. Fetch TV is also sold via leading retailers such as JB Hi-Fi, Harvey Norman and The Good Guys.

The transaction is subject to ACCC approval and other customary conditions precedent.

Telstra owns 35% of Foxtel, so the issue is whether they can still retain this stake plus a major share of Fetch TV.

Telstra has a set-top box agreement with US provider Roku that expires at the end of the year. Roku has been providing the equipment for Telstra TV since 2015.

Source: Trading view [click to enlarge]

SubHub, which provides Optus customers with the option to manage their content subscriptions all in the one place, currently includes partners such as Netflix and Amazon Prime and will soon include Fetch.

Optus stopped the sale of any new Fetch service from March 7, but existing customers with Fetch TV from Optus will not have their service impacted by this potential change.

Optus’ vice president of TV, content and product development, Clive Dickens, told the SMH that any deal with another telco provider would not affect its relationship with Fetch.

“We have had a long and strong relationship with Fetch,” he said. “We have announced Fetch will join us as a partner on our innovative Optus SubHub platform. Our existing Optus customers using Fetch will not have their service impacted by this.”

Mumbrella has contacted Telstra and Fetch TV for further comment.

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