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Telecommunications iiNet grabs Westnet for $81 million in cash
Telecommunications iiNet grabs Westnet for $81 million in cash | iiNet grabs Westnet for $81 million in cash |
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| by Stuart Corner | |
| Thursday, 08 May 2008 | |
  
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iiNet's largest shareholder, Amcom, took of 5.7m of the shares on offer to retain its stake as the largest shareholder with 22.4 percent. AAPT, another large shareholder also took up some of the shares. Westnet with 215,000 services in operation, 138,000 on broadband, is Australia's sixth largest ISP and, according to iiNet was "one of the last significant subscriber bases on the market." Both iiNet and Westnet are Perth based and between them claim a 30 percent share of the Western Australian Internet access market. iiNet says it will retain the Westnet brand and staff and the existing Westnet product range and is "commited to growing the Westnet brand and customer base." The managing director of Westnet, Peter Brown, said: "As all staff, including senior management, are staying on, we see little change in our operations and consider this as a great opportunity for both our customers and staff." Despite retaining the separate brands and staff iiNet claims tht significant synergies and savings will be achieved through the use of iiNet infrastructure, better rates from Telstra Wholesale as well as reduced transmission costs and significant bandwidth savings via iiNet's agreements with Pipe Networks. iiNet's last major acquisition was of OzEmail and that business was fully integrated into iiNet's operations: a process that was for from being smooth and which caused the company considerable strife. Integration generated a massive increase in calls that completey overwhelmed iiNet's call centres. In its results for FY 2006, iiNet reported an after tax loss of $60 million for the year to June 30, after writing down the value of OzEmail, acquired for $110m - $105m of this in cash - in January 2005. However the full year inclusion of the OzEmail business boosted revenues by 58 percent to $248.5 million. Westnet reported a gross profit of $29.4 million on revenues of $100.7 million for the year to June 2007 and was tracking to $133.6 million with a profit of $45.1 million in the current financial year. It is debt free with $2.0 million in cash. Its business is predominantly resale of Telstra and Optus wholesale services though a national network of 1000 resellers. The two companies combined will have revenues of around $375 million. |
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