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Optus Tipped To Put In Bid For iiNet Following TPG $1.4B Offer

Optus Tipped To Put In Bid For iiNet Following TPG $1.4B Offer

The combined 1.7 million customer base of the merged companies is a threat to Optus, TPG has about 750,000 broadband customers and the combined customer base would close to twice the size of Optus’ broadband customer base, Telstra’s has 3 million customers.

TPG Telecom first appeared on the share register of rival iiNet three and a half years ago and at the time several analysts tipped a bid for the WA Company earlier than 2015. 

The Australian Competition and Consumer Commission has already foreshadowed an inquiry into the proposed takeover on competition grounds.

For the ACCC, the core question is whether consolidation that reduces the number of significant broadband players from four to three and facilitates the creation of a stronger competitor to Telstra produces a better outcome than having a four-cornered contest.

Some observers claim that the takeover of WA based internet service provider iiNet by rival TPG is a logical fit 

With iiNet traditionally services the premium end of the market and TPG the budget end having a foothold in both makes a lot of sense with the NBN now a reality.

TPG’s consumer general manager is quoted on News.com websites as saying “Definitely we want to keep the brand, we respect and value the iiNet brand. The two entities will retain their identities and continue their existing marketing philosophies.

TPG has offered to pay $8.60 for each iiNet share, a 33 per cent premium above iiNet five day average share price in the lead up to the takeover announcement.

If TPG can manage the two cultures, it would become a formidable competitor to Telstra and Optus in an NBN environment. It would have scale, with more than 1.7 million customers, and a strong and deeper nationwide presence claims Business Spectator. 

It would also have some of its own infrastructure — TPG, which acquired Pipe Networks in 2010, has been trying, somewhat controversially, to leverage that infrastructure into a competitive alternative to the NBN by offering a fibre-to-the-basement product to multi-unit dwellings. iiNet has pursued an infrastructure-light strategy.

The ACCC’s attitude towards the deal could be critical. If it doesn’t stand in the way of the takeover it would leave the door slightly ajar for Optus, given the similar size of iiNet’s and its own fixed line broadband customer bases. Optus does, of course, also have a large wireless broadband presence.