Canberra telecommunications company TransACT has been bought by Perth company iiNet for $60 million.
The sale announcement was made this morning by iiNet. Much of the detail on how the sale will affect TransACT's customers in Canberra and several rural Victorian centres is still to be clarified by iiNet and TransACT.
iiNet said the sale would take effect on November 30, subject to satisfying a small number of procedural conditions.
iiNet chief executive officer Michael Moore said the purchase was part of his company's strategy to cement itself as "the new number two provider".
It allowed the company to increase its presence in the ACT and regional Victoria, while also acquiring significant network assets.
"iiNet's acquisition of TransACT represents an attractive strategic opportunity to build scale in the ACT market quickly and efficiently. In particular, TransACT's experienced and passionate management team will allow iiNet to grow its presence in the SME, corporate and government market segments, a key growth area for the company," he said in a statement.
"We are also excited about the strong existing relationship between TransACT and ActewAGL, the leading utility provider in the region, and the resulting growth opportunities for both companies."
The current management team will remain in place.
TransACT chief executive officer Ivan Slavich said his company would gain access to a leading national brand.
"iiNet's reputation for excellent customer service and product innovation will be well received by our loyal residential, SME, corporate and government customer base," he said.
TransACT was established about 12 years ago by Actew, an ACT government owned corporation. It invested $60 million in the venture, which soon ran into financial difficulties as the dot com bubble burst. Other investors were obtained, principally Hong Kong-based TVG private equity group, which now has a 35 per cent interest in TransACT.
Last week, telecommunications analyst Paul Budde said the sale of TransACT to iiNet would be a win for all parties. He said the sale would give Canberra customers a viable network which could compete with Telstra and Optus and with the ability to upgrade and expand.
The future of TransACT's sponsorships is unclear. Its major sponsorship is with the Canberra Capitals who compete in the Women's National Basketball League. TransACT's sponsorship also provides support to schools, community groups and local organisations with services in kind, funding or promotional items to help with fund raising.
Mr Budde said TransACT had done a fantastic job, initially giving Canberra among the world's first high-speed networks. But circumstances had changed. TransACT would need much more capital to compete in a national market and iiNet had to grow to compete with Telstra and Optus.
He said it was likely iiNet would offer more competitive prices and would offer a good deal to customers in the ACT and country Victoria.
iiNet was established about 18 years ago by Mr Malone in his parents' garage in Perth. In Melbourne last week he was named the Ernst & Young 2011 Entrepreneur of the Year. Mr Malone said at the time that he had begun the business with the sole purpose of connecting himself to the internet.
"Now, my staff connect and support more than 1.3 million services across the country.''
iiNet is Australia's second largest digital subscriber line (DSL) broadband provider, employing about 2000 staff.
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