Just a few weeks after it was announced that Australian fixed line incumbent Telstra confirmed it had halted its mooted purchase of alternative broadband provider Adam Internet, rival iiNet has revealed that it will now buy the Adelaide-based operator. Issuing a statement on the matter, iiNet confirmed it will acquire Adam Internet Holdings and associated companies, which have approximately 70,000 broadband subscribers, most of which are located in South Australia and the Northern Territory, for AUD60 million (USD53.4 million) cash consideration. Completion of the purchase, iiNet noted, remains subject to ‘a number of standard procedural conditions which are expected to be met by 31 August 2013’, though it noted that the Australian Competition and Consumer Commission (ACCC) had already cleared the transaction.
Pointing out a number of the perceived benefits of the acquisition, iiNet noted that should the deal complete it will boost its total broadband subscriber base to in excess of 900,000, while also adding ‘a range of key South Australian business and government clients consuming data-centre, hosting and cloud services’. Further, iiNet said it will gain a new data centre and additional DSLAM and fibre network infrastructure. In terms of financial expectations, iiNet has said it that Adam is forecast to generate turnover of AUD55 million in FY 2014, with EBITDA of AUD11.5 million in that period, with synergies likely from FY15 onwards.
Commenting on the deal, Greg Hicks, executive chairman and founder of Adam Internet, said: ‘We believe that this transaction provides real benefit to Adam Internet’s customers and staff as it aligns them with iiNet, Australia’s leading ISP in customer service’. Meanwhile, iiNet CEO Michael Malone noted: ‘This acquisition further builds on our strategy to grow scale in the national residential and business broadband segments. Following completion of the acquisition, iiNet will have over 900,000 broadband customers accessing industry leading service levels and a growing suite of telecommunications products at the forefront of industry development.’