Amcom follows PowerTel in seizing sizeable iiNet stake

31 May 2006

Perth-based telco Amcom has agreed to acquire a 19.97% stake in Western Australian ISP iiNet for AUD18.3 million (USD13.9 million), taking advantage of the company’s deflated share price to become its largest shareholder. The deal follows last week’s news that Sydney-based telco PowerTel agreed to acquire a 14.9% stake in iiNet. Both Amcom and PowerTel acquired the bulk of their stock at between AUD0.80 and AUD0.85 per share, a 50% discount on iiNet’s AUD1.69 share price before it stopped trading last month. At their peak, iiNet shares were trading at AUD3.4 in September 2005.

Amcom is a major provider of corporate broadband services in Western Australia, where it owns and operates more than 800km of high speed metropolitan networks, accessing over 660 buildings in Perth, Adelaide and Darwin. PowerTel is a major player in the wholesale internet market, whilst iiNet is the country’s third largest residential broadband provider, with 6% of the market at the start of 2006. Under the terms of the deal the three companies are expected to share network infrastructure, allowing them to compete more effectively against larger rivals Telstra and Optus.

‘As PowerTel has very limited network infrastructure in Perth and Adelaide, Amcom’s extensive network is better positioned to provide iiNet with access to very high capacity backhaul to 55 of its exchanges in these cities,’ Amcom said in a statement. ‘This access will not only substantially reduce iiNet’s current backhaul costs but more importantly enable iiNet to scale its business growth with marginal costs and to pursue its MSAN (Multi-Service Access Node]strategy to include IPTV and video-on-demand products.’

Australia, iiNet (incl. Internode)