TPG Telecom announced on Friday that it will acquire 100 per cent of iiNet for $8.60 per share, in a transaction valued at $1.4 billion.
David Teoh, executive chairman and CEO of TPG, said iiNet and TPG are complementary businesses in terms of geographic presence, market segments and corporate customer base.
The acquisition will increase TPG’s broadband subscriber base to more than 1.7 million customers and “delivers scale benefits in an NBN environment,” TPG said.
The companies have combined revenues of $2.3 billion and EBIDTA of $654 million. TPG already owns 6.25 per cent of iiNet.
iiNet provides 1.9 million broadband, telephony and IPTV services to more than 975,000 broadband customers with 50,000 net customer additions over the last 12 months, edging it closer to rival, Optus. iiNet also has more than 60,000 NBN and fibre subscribers.
iiNet chairman, Michael Smith, said in a statement: “The board views this as a significant reward for shareholders who have shown their faith in iiNet. The price of $1.4 billion is a very tangible measure of the value that the extraordinary people of iiNet have created through their innovation, brilliant service and capacity to add value.”
The total value of $8.705 per share is a higher price than iiNet has ever traded in its history, the company said on Friday.
iiNet shareholders will vote on the acquisition at the company’s annual general meeting in June.
TPG will release its preliminary results on March 24.
Telecommunications analyst, Paul Budde, told
"We are seeing more and more industry concentration and that is not good for the future of competition," he said.
"However, as the telco market in general has failed to diversify [and] move more into value-added services, consolidation is unavoidable.
"Over the next decade, the bulk of the industry will move away from basic telecoms services such as access to the services and applications around IoT and M2M, with the telcos becoming wholesale providers to those organisations," he said.
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