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iiNet to buy Netspace for $75m?

By Liam Tung, ZDNet.com.au on March 11th, 2010

Topics

dslam, iinet, malone, marburg, netspace, telstra

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iiNet has requested a trading halt following speculation that it will acquire fellow internet service provider, Netspace.

Michael Malone

iiNet CEO Michael Malone (Credit: iiNet)

iiNet said it requested a trading halt in response to a speculative article in the Australian Financial Review. The newspaper reported that a deal was expected to be made within the coming fortnight. The report speculated that the deal could be worth $60 to $75 million.

The halt was expected to be lifted within two days, after iiNet responds to the speculation.

Netspace was founded in 1992 by chief executive Stuart Marburg and technical director Richard Preen and is not listed on the Australian Stock Exchange. The company claims to have around 80,000 customers, which would, if acquired, leave iiNet with just under 600,000 customers in total — 400,000 short of where its chief Michael Malone said he wants the company to be by the time the NBN Co access is available.

The speculated move also comes after iiNet was bumped from its third largest ISP spot when no-frills ISP TPG announced its intent to acquire Pipe Networks, which recently completed its PPC-1 Sydney to Guam cable, and owns an extensive metropolitan network that services enterprise customers.

At the company's half-year results Malone told ZDNet.com.au that in preparation for the launch of services on NBN Co, its goal was to achieve 15 per cent market share.

"We said we want to get 15 per cent market share. That's approximately 1 million customers. We think we need to get there," he said. "We have to be NBN ready." The ISP, which also owns Westnet, said it was on the lookout for and in the position to make acquisitions this year.

Both Netspace and iiNet were pioneers in the ISP space, which invested in their own DSLAMs at Telstra exchanges. Netspace last year installed a further 10 DSLAMs across Tasmania. iiNet is believed to have just one of its own DSLAMs in Tasmania.

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Talkback

na

Telstra 2.0

AnonymousAnonymous March 11th, 2010
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The iiBorg strikes again

They are the iiborg. Resistance is futile.Netspace's individual distinctiveness will be added to the collective

AnonymousAnonymous March 11th, 2010
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iiThreat

Back in the good 'ol days I was a happy iiNet customer from 2001 through to 2008. Somewhere around the '07 mark iiNet started to take on a new persona. They stopped catering for the power user and iiNet joined the dark side with Telstra and Optus, who's advertising campaigns began to target Joe Average. At this time almost all of my friends in the professional IT sector also left you iiNet, but I think you already know this because your new persona was not an accident. After all, average Joe is where the money is, and Telstra and Optus already know this. Slowly but surely the iiPlans began to be re-branded to look like brightly colored happy meals, which is great if your audience are children. Then came the onset of the bundled voip plans and the melding of your userbase into one large spoon fed conglomerate. I do applaud your ability to keep Westnets persona and they do outshine you each and every time I call, you would never know you even owned them. Just like everyone else in the industry im wishing as you start to dominate you would give something back to all us power users again and stop feeding off the unsuspecting average Joe. We watch and wait. The IT professional.

AnonymousAnonymous March 11th, 2010
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Rant

Try using paragraphs if you would like to be taken seriously.

Also makes it a lot easier to read.

Good on them, they are a company and they are making money... they suite my needs perfectally.

If you were running the business wouldn't you like to make it as successful as possible?

AnonymousAnonymous March 11th, 2010
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on the cards for a while...

I'm guessing that iiNet has had Netspace in its sights for a while, which would it explain why it didn't bother rolling out DSLAMs throughout Tasmania to keep up with competitors such as Internode and Netspace.

Smart move by iiNet.

JonathanJonathan March 11th, 2010
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Take on the top...

Should be investing more and acquiring AAPT which will not only top you as 2nd larges ISP but 3rd in Telco in general

Andrew S-JAndrew S-J March 11th, 2010
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Up goes the price and down goes value

Let's hope the FTTH network can attract some new players in the ISP game.

Mel SommersbergMel Sommersberg March 15th, 2010
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