M2 Group, the parent company of Dodo and Primus, has launched a counter bid for rival telco iiNet to TPG.
In March, TPG announced that it had made an AU$1.4 billion bid to buy out iiNet to combine the two companies to take its overall customer base to 1.7 million customers, with revenues of AU$2.3 billion.
TPG now faces competition in its battle to acquire iiNet, with M2 Group on Monday confirming that it has made a counter offer that it values at AU$11.37 per share, or the equivalent of AU$2.25 billion in total.
There would be 0.803 M2 shares for each iiNet share, plus an $0.75 special dividend, and AU$1.37 worth of estimated synergies.
iiNet shares were up 16.6 percent on the announcement.
The company submitted the offer to the iiNet board last week, which is still considering the offer. If the board decides the M2 offer is superior, then TPG will be able to make a counter offer.
"The process we have put in place has functioned to allow competing, potentially superior offers to be put to the company. Whilst we will now need to spend some time working through the process, we are confident that the final result will have positive implications for shareholder value," iiNet chairman Michael Smith said in a statement.
Under the M2 offer, two iiNet directors would be invited onto the M2 board, and CEO Geoff Horth confirmed on Monday that iiNet's brand, sales, and customer service teams would remain as normal should the acquisition be approved.
"We both very much play that value-add service role. We're not deep infrastructure owners," he said.
"We have almost that United Nations of people coming together ... we go to market in different ways, but I think we have very similar philosophies, so we will be working very hard to preserve the value of the iiNet brand and the passion of its people and its customer advocacy as part of this transaction."
Although TPG has said that it will retain the iiNet brand, criticism over the takeover deal, including from iiNet founder and shareholder Michael Malone, has been that TPG is "faceless" and iiNet's challenger and customer advocacy brand would be lost in the buyout.
Horth said he had not spoken to Malone prior to making the offer to iiNet's board, stating that communication with its founder would have been "completely inappropriate", but said the bid was made in reaction to shareholder concern.
"Our offer clearly seeks to proactively address some of the concerns by iiNet shareholders," he said.
"We were mindful of those shareholder concerns when we made that offer. We absolutely look at the iiNet service experience, and churn rates, and net promoter scores with a degree of envy, and we absolutely think we can learn some things from the iiNet team on how to approach that."
Horth said the bid is not just about "earnings, but learnings".
"We don't have to make any significant changes to the customer-facing elements of this business to achieve those synergies, and we will be working very carefully to protect those brand values and the customer proposition, because they have been hard won," he said.
M2 was also involved with iiNet in losing a court battle against Dallas Buyers Club LLC accessing the customer details of 4,726 alleged copyright infringers. Horth said that such customer advocacy fights would continue should M2 buy iiNet.
"Any matter we're concerned could affect the privacy or peaceful enjoyment of our services by our customers we will pursue," he said.
Horth said he could not say whether iiNet's subsidiary brands including Adam and Internode would be retained as part of the takeover bid.
"Until we are in a position where we are successful with this and we have an engagement with the iiNet teams, we won't make a call on that. And that's really about understanding exactly what the rationale is for maintaining those brands."