news TPG has told iiNet staff that it will maintain the iiNet and Internode brands as well as the pair’s call centre operations, as the national broadband provider increasingly takes steps to digest and transform the acquisition that will make it Australia’s second largest broadband provider.
iiNet is one of Australia’s best-loved broadband providers. Famously founded by entrepreneur Michael Malone in his garage back in 1992, the company had earned a reputation for solid network and customer performance, as well as innovation and challenging the dominance of Australia’s largest telco Telstra. Along the way, iiNet itself swalled dozens of other smaller companies, including sizable concerns such as Internode, Westnet, Netspace, OzEmail, Adam Internet and more.
The company’s acquisition by rival TPG has raised eyebrows in the telecommunications industry, as it will substantially consolidate the industry down from five major players to four. However, the Australian Competition and Consumer Commission did not oppose the merger, based on the principle that TPG would still face three other major competitors — Telstra, Optus and M2.
Since the acquisition was approved, TPG has spoken little in public regarding its plans for its new subsidiary, although it has taken relatively rapid action to terminate product lines it has viewed as undesirable, such as iiNet’s relationship with Internet television provider Fetch TV, as well as letting go iiNet’s chief executive David Buckingham, board directors and the company’s extremely long-serving public relations agency.
In an email to iiNet staff seen by Delimiter, TPG chief operating officer Craig Levy outlined a series of steps that TPG would take as it digested its acquisition.
“Last week marked the beginning of a new chapter for iiNet with the acquisition by TPG nearing the final stages of completion,” he wrote. “TPG management spent the week in Perth head office last week, and I speak for all of them when I say how excited we are to be working with so many talented staff across the business.”
Levy said the trip was the start of a “very long learning experience” for TPG’s management, “especially due to the fact that we didn’t cary out due diligence prior to the transaction.”
The executive said TPG would be focused on maintaining iiNet’s “excellent reputation for customer service”.
“Plus, behind the scenes work is underway to allow the iiNet network to leverage the TPG fibre assets on the metro and intercapital side,” he added, “meaning there are many opportunities for us to build iiNet’s product and service offering, which will ensure it’s an even more compelling ISP for new and existing customers.”
However, Levy noted that as with any acquisition, “change is inevitable”. The executive said TPG’s management would endeavour to keep all staff updated on any significant events over coming months. “Be assured that both the iiNet and Internode brands will be retained into the future, as well as our call centre operations,” he said.
The executive closed off his email to staff by noting that the combined TPG group was now the second largest Internet service provider in Australia. “With that comes plenty of opportunity,” he said.
opinion/analysis
I’m not surprised by the content of Levy’s email — it’s fairly standard corporate stuff following an acquisition. I’ve seen this kind of thing many times before.
All Levy is saying is that things will remain relatively calm at iiNet while TPG’s management no doubt conducts an exhaustive audit of the business. Remember, this will take some time — TPG did not have access to much going on inside iiNet prior to the acquisition closing. It will need to look at all of the senior staff, the profitability of the various product lines, physical and virtual infrastructure, and much more.
What TPG wants at the moment is to send a signal to iiNet staff to relax — nothing drastic is going to happen in the very short term to the business they care so much about. In other words, ‘hold course while we plot a new one’.
In the medium to long term, of course, everything is up for grabs. I would remind readers that after iiNet itself bought Internode, iiNet’s management at the time said that little was going to change regarding its new South Australian subsidiary. However, it didn’t take much time for iiNet to start harmonising Internode’s product lines with its own and changing the business behind the scenes.
This is what will happen with TPG and iiNet. In the short term, TPG will fire a few quick shots from the hip — knocking out Fetch TV, a few senior iiNet executives, the company’s PR agency, and so on. In the medium to long term, TPG will transform iiNet substantially. The truth is that every business owner makes over every acquisition the way that they want it — and TPG is hardly known for having a gentle nature ;)
Image credit: CeBIT Australia, Creative Commons
The executive closed off his email to staff by noting that the combined TPG group was not the second largest Internet service provider in Australia. “With that comes plenty of opportunity,” he said.
Was *not* or was *now* the second largest?
Should be now. Will fix :)
“In the medium to long term, TPG will transform iiNet substantially.”
Single sentence covers it. To presume iiNet and Internode will survive even close to their current form would be naïve to the extreme. I don’t even believe it will be a long-term change. TPG doesn’t have to operate on time scales that require communications to the market.
Changes are likely to be swift, short and brutal. Just as we have already seen.
You forgot to mention they are gutting the iiNetwork. What is the point of great customer service when the network is going to suck?
“Plus, behind the scenes work is underway to allow the iiNet network to leverage the TPG fibre assets on the metro and intercapital side,” he added, “meaning there are many opportunities for us to build iiNet’s product and service offering, which will ensure it’s an even more compelling ISP for new and existing customers.”
IE. Bye bye the great iiNetwork!
I have never been so dissapointed with the changes in a company as I have been in the last month with Westnet, halving data plans but charging the same price is not good customer service. I have been stuffed around rocating my service (even though I’m still in the same post code) so much that I have had to cancel all accounts and find a new ISP. And before I couldn’t sing their praises high enough.
“especially due to the fact that we didn’t carry (SP) out due diligence prior to the transaction.”
What sort of business spends a substantial sum of Ca$h acquiring another business without doing their due diligence? I’m calling BS on that!
“What sort of business spends a substantial sum of Ca$h acquiring another business without doing their due diligence? I’m calling BS on that!”
A business that is directly competing with Telstra and NBNco. A business that, in order to service 120+ POI has to bulk up, and acquire sufficient mass, before the opportunity is gone and someone else grabs the cookie.
I tend to think that whilst the purchase may have been hurried, iiNet were obviously gearing up to be sold regardless.
Don’t for a minute think TPG haven’t done their homework and went in blind. They just won’t have gone into as much depth as one would during due diligence (or say even got an independent third party to review).
Fetch is a good example that they had a fair idea of what was going on inside iiNet.
To be fair CEO DB only had his 18 months iiNet board experience in the sector to go on (read a quote in one of the articles somewhere) so chances of him staying on were always slim to none. Not in the least all he and the board have done of late is set up a ‘for sale’ sign and tread water.
Duplicate and redundant jobs going is bog standard too. I’m personally not seeing the ‘rats’ leaving a sinking ship just yet either (I’ve been there and seen that happen to a company).
I’d also say iiNet took on more features of Internode than the other way around. Pretty much aside from customer support I haven’t noticed much of change as a long term Internode customer but seen quite a few changes on the iiNet side of the ledger that made it look more like Internode.
Its going to boil down to if they let the ii/Node staff do their own network and if leveraging TPG assets is ok then do so, if buying competitors products is better then do so. Otherwise its just same ol TPG and PR Fluff and there is no longer a premium ISP.
Over the past couple of months I’ve seen iiNet call centre wait times blow right out. For years wait times even on retail have been under 20mins (and less than 5 for business) but I’ve been seeing 45 mins to an hour on retail and 30+ for business. There have been quite a lot of faults recently, so that’s obviously going to impact things, but maybe those faults are indicative of other, broader issues like, say, a hiring freeze…
hiring freeze was for any person over $150k (or was it $110k). That is standard practice when attempting a buyout. Same with freezing signing of new major contracts etc.
Given that pay level it’ll hardly have impacted on the ability to hire new help desk staff if it was required (also some of those are outsourced centres aka South Africa.
Good article Renai. I look forward to your future articles when TPG does an about face and dismantles iiNet and Internode internally.
I hope there are some smart people in the TPG camp who do recognise that some of us do want a premium internet service, are willing to pay for it, and who do use all of our monthly bandwidth allocation as detailed in our respective internet plans.
I do not want a situation where I am stuck in contention ratio hell and I am continually fighting TPG to increase my NBN CVC allocation. If that does happen I won’t be a TPGiiNode customer for much longer.
It’s a shame, I was looking forward to iiNet when the NBN rolled into my area. At least Malcolm is giving me a lot longer to research all the plans out there with his “go slow” on the NBN…
I`ve been an iinet customer for 6 years and have been dreading a TPG take over as the service and charges from iinet have always been the best in my many years of experience. In regard to pricing maybe that some credit must be due to the deal with Optus over the use of the network. But of course does not affect the standard of service which has been absolutely fantastic. That is due to excellence of management and staff.
But already I`ve noted changes in billing and pricing. No notice given on price increases or data reduction, just slightly higher rates.
I’ve been with Internode for some years before they were bought out by iinet; I rarely needed their help but found that iinet help staff were less experienced in pinpointing the problem I had (one time only). I am worried what sort of help will be available with TPG.
As someone whom worked for Node
Sometime that comes to process development, mentorship and technical experience. However my experience in 2009 alot of that was thrown out the door because everything went down the path of being performance driven (Liz Cunningham and top-down board decision pushed this)
So people with smarts were being pressured to fix and resolve calls quicker with less time to think smart. Which offend leads drop in work quality, less callbacks promises and professtionalism for some.
Also they hated staff with active whirlpool accounts and experience
I’ve been an iiNet customer for best part of a decade. Rarely have to phone support, but when I do it often ends up being escalated (I don’t phone until I’ve tried everything that I can possibly do). I do hope they don’t get rid of their call centres, because they have been an asset. Yes, sometimes long wait times, but with the virtual queue that’s not really an issue. I don’t want to jump ship, so I’ll wait and see what happens.
(Also… “swalled” and “cary” point to a journalist who is writing a heck of a lot of good work :) )
“TPG pledges to retain iiNet, Internode brands, call centre”
….. and so what.
I never wanted to be a customer of TPG so I went to Amnet.
I’m I’ve been with Iinet for 17 years!!! I’m extremely unhappy with the takeover by TPG. If they screw up a successful company that has provided a premium service I’ll be jumping ship too.
And what use is the ACCC when they allow the market to be narrowed down like this? There’s only 4 real ISP choices now and going with Telstra is out of he question so I’m left with Optus and M2 (Dodo? I don’t think so!) if TPG suck? Great range of choices – thanks ACCC.
ACCC should have said “NO”.
By all means, ACCC, we sure don’t want a successful company with good, loyal employees providing great service to exist in AU! Oh, hell no. Better we can the lot & dismantle what’s been working.
To allow these dimwits to step in only to deliberately undermine & ruin the ONLY excellence in AU telco’s, is preposterous in the extreme! I see TPG as being led by a bunch of narcissists who think they’re much smarter & better than anyone else. You know what I mean? There’s a name for it: Dunning–Kruger effect. They’re all just horrible excuses for human beings who think nothing of crushing out great co’s & firing great people because they cannot discern the difference (Dunning–Kruger effect).
Have to agree that the great iiNet service from the Call Centers seems to be going down-hill fast. Impossible to talk to anyone in under one hour and the “call-back” service is a joke. Left request at 4 pm and got a call from iiNet when were in a restaurant after 8 pm that night and yet they say you do not lose your place in the queue by requesting a call-back!!!!
The best ISP in the business is being mashed up by money-hungry TPG and the customers are paying the price!
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