iiNet to Move Forward with Takeover Plan

Submitted by Jim Thesiger on 12 March, 2010 - 06:32

One of the leading telecommunications and internet services provider of Australia iiNet (IIN), is planning to move forward with a plan to boost the customer base to million before the national broadband network is completed by the federal Government. iiNet suspended its shares before making an announcement early Thursday regarding its decision to buy its Victoria based competitor Netspace for as much as $75 million. iiNet admitted that it was holding talks with the Victorian rival and other parties regarding the possible takeovers but agreement was yet to be confirmed. According to iiNet, the valuation that it came up with for Netspace was far below than the price range that was quoted in the media.

David Buckingham, the chief financial officer of the company stated on Thursday that the investors will be informed regarding the latest talks if the discussions lead towards any material development in order to fulfill the continuous disclosure obligations of the company. An agreement with Netspace is expected to lead towards a market with less than 10 ISPs remaining with the scale and profitability- something that is required to be considered as attractive targets for acquisition. It is to be mentioned that iiNet had more than 500,000 customers and 800,000 services in the books when it closed the December half with net profit going up by as much as 30 percent hitting $14.8 million on revenue of $228.1 million. Michael Malone, the chief executive of the company gave the signal during the announcement of the result that the company may consider going for acquisitions.

During the year 2005, as much as $100 million was spent by the ISP to purchase OzEmail and it went for the acquisition of Perth-based Westnet during the year 2008 for another $81 million. The owners of iiNet have managed to get approximately 30 micro-ISPs a market exit over the last four years through acquisitions.