iiNet this week announced that it will acquire Internet Service Provider (ISP) TransACT, a regional ISP servicing the ACT and regional Victoria.iiNet acquires TransACT (Credit: TransACT)
According to the SMH, iiNet intends to fund the $60m purchase via current cash and debt, leaving itself geared at 70%. The gearing ratio refers to the percentage of debt compared to equity and capital, the higher the ratio, the riskier the company is (according to Investopedia).
The TransACT network covers both Fibre and Copper, offering ADSL Over the Air, FTTP (fibre to the premises) and a hybrid VDSL service. Michael Malone is reported to have said that 'over-building TransACT, particularly in Canberra, would be commercially and politically odd'.
Given that TransACT has been on the market for a while, and that the investors have reported losses in the company, this is a good buy for iiNet. It provides iiNet with lucrative government contracts and a well regarded high-speed network without taking a large hit financially. And given that the TransACT network already works under a separate pipe and ISP model within the ACT, it should actually slot in nicely with the NBN. iiNet is already providing ISP services through the ACT network, so in effect, they are buying the pipes.
Given that TransACT is also a Mobile and Cable TV provider, this will also fit nicely with the expansion iiNet is making into these areas.
My personal understanding on TransACT is that it is a well regarded brand and service in the ACT (apart from the running joke on Whirlpool regarding TransACT tech support), and if handled correctly, iiNet can make this purchase work.
More details may be forthcoming at the iiNet Annual General Meeting. For those interested, the AGM will be streamed live here.
People may also want to check out the Whirlpool forums regarding iiNet on TransACT, that has a well informed and lively debate on the subject.
