$105m secures OzEmail for iiNet

PERTH-BASED Internet service provider iiNet will become Australia’s third-largest ISP after this week announcing a successful deal to acquire its competitor, OzEmail, for $105 million from Nasdaq-listed MCI.

The deal adds 230,000 Internet subscribers to iiNet, growing its customer base overnight to over 620,000 nationally.

Speculation over financing arrangements has been rife over the past month as iiNet emerged as the front-runner in bidding for the company.

However, iiNet chief executive Michael Malone told WA Business News that a 5:6 debt to equity arrangement would be sought from institutional investors backing the deal.

Combining the two operations is not as easy as it looks either, according to Mr Malone.

“We have acquired 30 businesses in our time, but this is a huge transaction and it’s a challenge for our staff,” he said.

The carrier plans to retain the OzEmail brand and staff with plans to invest in $12.5 million of east coast DSL infrastructure.

The announcement coincided with a half-yearly report detailing an increase in net profit of 25 per cent and revenue of 74 per cent.