iiNet to exit NZ

update Troubled telco iiNet has started looking for a buyer for its iHug-branded New Zealand business. iiNet has received "several" unsolicited approaches to purchase iHug, iiNet executive chairman Peter Harley told ZDNet Australia by telephone this afternoon.

update Troubled telco iiNet has started looking for a buyer for its iHug-branded New Zealand business.

iiNet has received "several" unsolicited approaches to purchase iHug, iiNet executive chairman Peter Harley told ZDNet Australia by telephone this afternoon.

Peter Harley

"They are industry, and they are private equity. Both local and offshore," Harley said, declining to name the interested parties.

Telstra's New Zealand division TelstraClear is one possibility, but a spokesperson for the telco was not immediately available to comment.

The news of iiNet's plans comes as TelstraClear yesterday announced a NZ$50 million investment in a new 3G mobile broadband network in the city of Tauranga in New Zealand's North Island.

In a statement sent to the Australian Stock Exchange this morning, Harley said an information memorandum would be distributed to potential purchasers by the end of July, with the sale process expected to be completed by the end of this year.

Harley told ZDNet Australia that iHug chief executive officer Mark Rushworth and his "very strong management team" would "absolutely" stay on through out the process.

It's only been three years since iiNet bought the Australian and New Zealand operations of iHug, but iiNet has suffered recent financial setbacks and is re-focusing on its core Australian market.

"Following the recent strategic review of the business, the board re-affirmed its commitment to further develop iiNet's Australian business and concluded that the NZ operation was outside this key focus of activity," said Harley in the statement.

Harley said a recent wide-ranging package of telecommunications reforms handed down by the NZ government, in addition to iHug's "improved trading performance" had given iiNet the opportunity to realise an enhanced value for iHug.

iHug is the third-largest Internet service provider in NZ with over 120,000 services, behind Telecom New Zealand and Telstra's Kiwi business TelstraClear.

iHug's original Australian customers have been integrated under the iiNet brand and will remain with the telco.

iiNet has appointed corporate advisory group Grant Samuel in Auckland to manage the sale process.

In wider iiNet news, Harley said more details would be available in late August of iiNet's plans to let PowerTel sell wholesale broadband services using iiNet's network.

iiNet and PowerTel partnered in May in a deal seen as attempting to wring greater returns from iiNet's extensive broadband network, one of the nation's largest.

"Under our agreement, we've got a network optimisation plan due to be finalised by the 23rd of August," Harley told ZDNet Australia.

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