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Dodo founder Larry Kestelman says Vocus Communications and M2 Group must merge to become more like newly bulked-up larger rival TPG Telecom in order to survive.

M2 and Vocus announced on Monday they would merge to become a $3 billion telco titan that would buy up rivals and take on bigger players like Telstra, Optus and TPG.

Dodo founder Larry Kestelman, who sold his business to M2, said the merger of M2 and Vocus was a matter of survival.
Dodo founder Larry Kestelman, who sold his business to M2, said the merger of M2 and Vocus was a matter of survival. Photo: Wayne Taylor

It was Mr Kestelman's 2013 sale of Dodo to M2 that helped cement the latter's position as one of Australia's biggest providers of broadband services. Both companies worked by reselling the internet services of other telcos.

The news has received a tough reception from Vocus shareholders, who have sent its shares down 11.7 per cent since Friday.

But Mr Kestelman told Fairfax Media that the days of resellers thriving were over thanks to the $56 billion national broadband network as well as the rise of much larger consolidated telcos like TPG, which recently bought its rival iiNet for $1.56 billion.

"You probably need to have a combination of infrastructure and sales experience," he said. "The days of the pure and absolute MVNO [mobile virtual network operator] are probably gone.

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Source : http://www.smh.com.au/business/dodo-founder-larry-kestelman-says-m2-vocus-merger-a-matter-of-survival-20150929-gjx2cx.html

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