Telstra buys majority stake in set top box maker Fetch

The deal comes amid a period of intense competition – and tumult – for streaming giants like Netflix.

Telstra, which is led by Andrew Penn, has bought a hefty stake in Fetch. Picture: Gary Ramage/NCA NewsWire

Australia’s biggest telco Telstra will acquire a majority stake in streaming box maker Fetch at a valuation of around $100m.

The telco will invest around $50m into Fetch as part of the deal, which was previously flagged by The Australian, including for the provisioning of onboarding Telstra TV customers onto the Fetch platform.

Telstra TV has around 800,000 active subscribers, which were using a product from US tech company Roku.

Fetch has around 670,000 active subscribers, and the company’s incumbent shareholders, Astro Holdings, will retain a 49 per cent stake in the company.

Fetch’s set top boxes is sold in JB Hi-Fi, Harvey Norman and the Good Guys, as well as from telcos including Optus, Vocus and Aussie Broadband. It’s unclear what will happen to those arrangements.

Fetch’s TV HR01 Box

“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,” said Telstra’s executive in charge of technology Kim Krogh Andersen.

“It also needs to support future entertainment options and be delivered via the hardware options customers want including Smart TVs. 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 road map and strong track record delivering capability for other Australian telco partners.”

Fetch’s set top boxes provide access to pay TV channels, as well as streaming services such as Netflix and YouTube.

The deal is subject to ACCC approvals, and comes amid a period of rampant competition for the streaming industry.

Shares in Netflix last week suffered their largest ever one-day drop after the company reported a loss of 200,000 subscribers, with rival streaming services including HBO Max, Disney+ and others continuing to steal customers.

Foxtel meanwhile, which is jointly owned by Telstra and News Corp, publisher of The Australian, is mulling a potential float this year.

“This investment from Telstra will allow Fetch TV to accelerate growth and deliver a genuinely competitive Australian home and entertainment solution,” Fetch chief executive Scott Lorson said.

Fetch TV boss Scott Lorson at their offices in North Sydney. Picture: James Croucher

“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.”

Telstra CEO Andy Penn told The Australian in an interview this month that any tie-up between Telstra and Fetch would not diminish the longstanding Telstra-Foxtel partnership.

“Whatever we will do, the dynamics of that don‘t change,” he said. “We do need to progress the technological side of our TV platform, because you need to keep investing in top technology and keeping it ahead. But we don’t intend to in any way change the modus operandi.”

Foad Fadaghi, managing director of analyst firm Telsyte, said the deal should not come as a big shock to the industry.

“It’s no surprise Telstra is interested in Fetch, given its technology and its ability to scale up and add new streaming services as they come out,“ he said.