Telstra Reckons TPG Might Buy Out iiNet

Acquisitions. I never knew they were infectious. Yet, going by Telstra’s recent communications to its staff, they may very well be, with the telco informing its employees that TPG could buy up iiNet, a move that would see the company leap into second position among Australia’s internet providers.

Hot on the deal-sealing heels of iiNet’s purchase of Internode, Delimiter caught wind of speculation by Telstra on iiNet’s future. TPG already owns just over seven per cent of iiNet, so if it were to take the company under its wing (or into its maw, depending on your outlook), it wouldn’t be unprecedented.

Here are the exact words from Telstra, as provided by Delimiter:

“iiNet’s $105 million acquisition of Internode, announced just prior to Christmas, will see it gain 190,000 subscribers, and spearhead TPG Telecom into third place among broadband providers behind Telstra and Optus,” the company’s update read. “In recent months, TPG Telecom has been building a stake in iiNet, which, according to market speculation, could be a precursor to a full takeover.”

Delimiter notes that while the Telstra communiqué mentions “third place”, the outlet’s own calculations put TPG in second place, post-acquisition.

There’s certainly been a number of players in Australia’s ISP history — I myself once being a customer of iGreen many years ago, which eventually became People Telecom. But consolidation is a natural process and I’d prefer it to occur all in one go, like a giant, business-buying band-aid.

The Delimiter article suggests that a merging of TPG and iiNet wouldn’t be the smoothest in the history of takeovers; the companies go about their business in different ways, with TPG’s clinical approach potentially clashing with the laid-back and jovial style of iiNet.

iiNet CEO, Michael Malone, speaking with Delimiter, said any takeover would have a big enough impact on the industry that the ACCC would likely be involved.

[Delimiter]