More ISP rationalisation expected, at the top end

Stuart Corner
Wednesday, 07 April 2010 11:28

IT Industry - Market

iiNet's acquisition of Netspace is being tipped as the first of several in a major rationalisation of top end ISPs, but there is likely to be little impact on almost 400 smaller ISPs serving mostly regional customers, according to wholesale provider IspONE that serves many of these.

In the wake of his company's acquisition of Netspace last week, iiNet CEO, Michael Malone, told a 'Market Eye' interviewer that the company was committed to its stated target of achieving 15 percent share of the broadband Internet access market and would be spending big in the current financial year to achieve this goal.

"We're now at 10.6 percent, and following the acquisition of Netspace will be at 12.4 percent – which means doing more acquisitions as well as growing organically. So it's all about customer growth for us right now and the foreseeable future," Malone said.

"For example, 70 percent of the $30 million in capex we will spend this financial year will be spent on customer growth."

iiNet is currently number three in terms of retail broadband customer numbers after Telstra and Optus. Asked: "How do you see the competitive dynamics changing if the largest ISPs continue to lose market share?" Malone replied: "There will be a point at which they react, but a price war will hurt them more than cost-competitive nimble players like iiNet. We're watching the market but we don't see the dynamics changing yet."

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