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.
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 ;)