Mergers, record results for ISPs

THERE have been several significant merger moves among listed Internet service providers recently, in addition to the reporting of record profit results. Datafast Telecommunications has informed the market of the termination of its merger implemen-tation agreement signed with Aus-tralia’s eighth-largest ISP, Adelaide-based Chariot Limited in mid-July. Datafast chief executive Simon Ehrenfeld said that, on advice from corporate advisors Pricewater-houseCoopers Securities and Allens Arthur Robinson Solicitors, the outcome of the due diligence process led the company to believe that the merger would not enhance value for shareholders. Following the termination announcement, Chariot revealed it had acquired Melbourne’s largest independent ISP, Alphalink, bringing it 30,000 new customers. Chariot said in a statement that the acquisition of Alphalink had been pending since December last year, but due to restrictions involved in the Datafast merger implemen-tation agreement, Chariot could not finalise its acquisition. The merger would have created Australia’s fifth largest ISP, with 275,000 Internet accounts. On August 17, Datafast announ-ced it had acquired the customer base of Global Solutions Network, a Victorian-based broadband ISP. Integrated telecommunications company Amcom Telecommun-ications has announced the acqui-sition of Perth-based ISP Arachnet and delivered a record profit result. The acquisition will add a further 7,500 customers to Amcom’s Amnet division, with more than 5,000 of these being DSL customers. The Amnet division targets small to medium enterprises and primarily offers DSL and voice services. Amcom sales and marketing general manager Loula Papandreou said the acquisition provided several clear synergies. More than 60 per cent of Arachnet’s DSL broadband custom-ers are located within Amcom-enabled exchanges and, by migrating onto Amcom’s network, these customers now have the choice of upgrading to faster ADSL speeds, Ms Papandreou said. Amcom’s profit after tax for the year ended June 30 was up 23 per cent, to a record $2.1 million. Declaring a final fully-franked dividend of 0.25 cents a share, Amcom said the result provided a sound platform for this financial year, with the Amnet division is expected to turn profitable in the second half. Perth’s largest ISP, iiNet, also announced its full-year results to the market, posting a record $18.8 million profit for the year ended June 30, representing an increase of 73 per cent on the previous year. The result included a four-month contribution from OzEmail, which was bought in March by iiNet, Australia’s third largest ISP. Taking into account $13.2 million worth of amortisation of goodwill and subscriber bases, net profit after tax was $5.6 million. iiNet’s group operating revenue was $158 million during the period, which was 66 per cent higher than that reported in the previous year. iiNet managing director Michael Malone declared a final fully-franked dividend of four cents a share. At June 30, iiNet had an Internet subscriber base of 690,000 and a telephony facility servicing 71,000 users. In late June it launched the country’s first wide-scale voice-over-Internet-protocol service.

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