Telstra has denied that its purchase of Adam Internet is a move to secure more customers before the company begins decommissioning its copper access network and transferring customers onto the National Broadband Network (NBN) in order to receive cash payments from the Federal government.
Telstra announced this morning that — subject to regulatory approval — it had entered into an agreement to buy Adelaide-based internet service provider (ISP) Adam Internet for an amount the company has refused to disclose.
Telstra will receive payments for customers it transfers off of its network and onto the NBN as part of the AU$11 billion deal signed with NBN Co and the government. Telstra's Innovation Products and Marketing Group Managing Director Kate McKenzie told journalists this morning that the deal with Adam Internet does not mean that Telstra will receive extra payments from Adam Internet customers signing onto the NBN.
"This doesn't change the nature of those payment arrangements at all."
"Our motivation for buying Adam Internet is that we're looking after the value-conscious part of the market, which we think [Adam] is serving very well. There's good opportunity for growth potential."
Adam Internet currently has just under 100,000 customers, and Adam's sole owner and executive chairman Greg Hicks said that he only came to the decision to sell the company over the weekend.
"I've had offers on the table from pretty well every suitor for the last five years, or ten years," he said. "I have looked at this over the last six months, [but] until the weekend, I hadn't fully decided that the deal on the table would show a future for Adam, and security for the staff."
Hicks said that it would be business as usual for now, with the company continuing to offer the same products to customers, but said that the advantage of selling to Telstra is that Adam can now offer a whole range of new products.
"There's a lot of other products there that can add to the brand," he said. "It's not a mini-Telstra. It's business as usual."
When iiNet bought Internode back in 2011, Adam Internet said that it was "the only true remaining South Australian ISP." Today, Hicks said that the company remained an Adelaide company, despite selling to Telstra.
Internode today sought to woo disaffected Adam Internet customers by announcing a new deal for South Australians, which would have them get free set-up and three months of free broadband on a 200GB per month or higher plan that is bundled with a phone service for 24 months.
Hicks said he wasn't concerned about customers shifting to Internode.
"We lose just as many customers to Telstra at the moment. It is a moving target, this industry," he said.
McKenzie said that the deal was part of a "multi-branding strategy" that many companies now use, and didn't rule out Telstra making further acquisitions down the track.
"From time to time, we look out there at what is in the market," she said. "I'm not saying there are thousands [of companies to buy] out there, but no doubt, we will continue to [look]."
She said that Telstra didn't see the fixed broadband market as saturated, and said that the company would still seek to grow its customer base organically.