iiNet buys Internet service provision business

The acquisition of the Internet service component will add 50,000 dial-up subscribers and approximately 2,500 broadband residential and business customers to iiNet's customer base.

The acquisition expands iiNet's presence in Victoria, New South Wales and Queensland as well as increasing the company's total customer base to more than 400,000.

The purchase price for the subscriber base is comparable to iiNet's previously acquired Australian customer bases. The consideration is 100 percent cash and will be funded by iiNet's existing financing facilities.

Like previous acquisitions, it will take approximately six to seven months for Virtual Communities to be fully transitioned onto the iiNet network and delivering earnings comparable to the rest of the iiNet business.

Michael Malone, managing director of iiNet, said "Customer and employee retention is our top priority, and we have planned a very careful, low impact transition to occur over the next six to seven months."

iiNet will offer employment to the Internet services employees of Virtual Communities and continue operation of the customer support centre in Melbourne, where the employees are located.