Desperately seeking digital

Australia’s telco industry is a desperately competitive space, where every move by a Telstra, Optus or Vodafone draws a swift reaction from the other players.

That’s one way to see yesterday’s acquisition of restaurant review site Eatability by Sing Tel Optus, which paid $6 million to snap up the nine-year-old business.

SingTel recently snapped up a Singaporean food portal called HungryGoWhere, so there is a wider strategy here.

But it’s also worth noting that the deal comes a bit over a month after Optus’ great rival, Telstra, bought restaurant booking network Dimmi for an undisclosed amount. That was the first Australian investment for Telstra’s newish venture capital arm.

Is there some sort of connection between the telco and food industry we’ve been missing? Is there a group of telco executives who suddenly can’t bear to live without owning their own restaurant site?

I’m sure your average telco boss does like a gourmet meal, but I don’t think that’s what’s driving these deals.

Telcos around the world are looking to expand the range of services they offer their smartphone user bases and the seemingly global foodie push means that restaurant review and booking sites do offer the chance to tap into – and cross-sell to – potentially large groups of customers.

It’s a small deal for a company with the bulk of Optus, but a great payday for the Eatability founders, Hui and Celeste Ong.

That desire to tap into new groups of users is what is partly driving a number of the recent deals that have seen big companies buy up growing websites.

The other reason for the deals is a desire from these companies to show investors that they really do get digital.

News Corporation’s $30 million acquisition of Business Spectator publisher Australian Independent Business Media was all about the company repositioning its Australian media operations from print focused to digital focused.

APN News & Media’s $36 million acquisition of a big chunk of online retailer Brands Exclusive was all about showing its investors that it could diversify its earning base into online, and tap into new groups of users.

The Telstra and Optus restaurant acquisitions also say to investors that they are more than phone and data companies – they get digital and they understand content.

For entrepreneurs like Hui and Celeste Ong, the owners of Eatability, the precise motivation of these big companies probably doesn’t matter too much.

What matters to online entrepreneurs is that more potential buyers for their businesses are emerging. While two years ago most would have considered their best opportunity was to sell their business to a competitor or a private equity firm or an online-only portal builder, the arrival of the big telcos and media giants potentially changes the game.

For the right business, with a strong user base and business model, the exit options are increasing. And that’s a very good thing.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.


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