The biggest question around the counter bid from M2 for iiNet is: Will it be better than TPG?
When TPG announced its AU$1.4 billion offer for iiNet, the immediate reaction from many iiNet customers and its founder Michael Malone was one of horror. TPG is known as a discount-brand ISP with no great reputation for customer service, while iiNet is a premium brand, where customers do pay more for the added level of customer service.
iiNet and TPG are not exactly the right fit.
This can be seen in the two companies' net promoter scores (NPS): iiNet sits at 62 as of the last half of last year, while TPG sits at 30 for the same period.
TPG has stressed that it will retain iiNet as a separate and "premium" telco, while offering TPG as the discount brand. However, the company's reputation as a cost cutter has led to some concern that customer service would be sacrificed for lower costs.
Similarly, iiNet has a strong history of customer advocacy and defending its customers. Where iiNet refused to pass on copyright infringement notices to its customers, TPG has a history of doing so.
TPG is never involved in public debate around the shape of the telecommunications industry, or the issues affecting it. TPG is famously media shy, and its founder, David Teoh, rarely gives on-the-record comments or interviews.
That's not to suggest that a telco needs to speak to media to be successful; TPG's customer numbers speak volumes. In the last half alone, TPG added 38,000 broadband customers, bringing its total customer base to 786,000, slightly less than 200,000 shy of iiNet's customer base of 975,000. Price alone cannot be the sole reason for customers keen to sign up not just for broadband, but also for the bundles that TPG offers.
Plus, anecdotal reports on TPG's fibre-to-the-basement rollout attest to the company paying greater attention to customer service to ensure that customers in the 500,000 apartments covered by the rollout are connected smoothly to their new service.
There is also the possibility that with an acquisition, iiNet's now-infamous capacity issues could be somewhat alleviated by TPG's extensive fibre networks, but ADSL customers with TPG have historically complained of capacity issues with their service.
Enter M2 and its self-valued AU$2.25 billion offer. M2 has been a quiet achiever in the telco industry, and never really broke into the consumer market until its purchase of Primus in 2012 and then its deal for Dodo in 2013.
Dodo, like TPG, is historically known as a cheap broadband service, with the level of customer service you would expect from such a low broadband price. M2's purchase of Dodo hasn't seen much change from the customer-facing aspects of the business.
As far as complaints to the Telecommunications Industry Ombudsman (TIO) can be used to measure customer satisfaction with a telco, TPG appears to be doing better than expected. Between October and December 2014, TPG actually came out on top, with the fewest recorded new complaints of all three companies.
TPG recorded 907 new complaints for the three months, versus 1,088 for iiNet and its subsidiaries Adam, Internode, Westnet, and TransAct, and 1,522 for M2's Commander, Primus, Dodo, Club Telco, and Engin.
Year on year, Dodo and iiNet recorded a slight increase in complaints, while TPG recorded a slight decrease.
M2 founder Vaughan Bowen's role in this acquisition should not be understated. He is now its executive director in charge of mergers and acquisitions, and after wooing Dodo founder Larry Kestelman into parting with his company has already reportedly convinced iiNet's board that the M2 offer is superior.
So which offer will be better for customers? While TPG has assured that iiNet will be a separate brand, the company's reluctance to talk much about the deal has done little to convince the public or shareholders, including Malone, that the merger is worth it.
M2, on the other hand, has gone to pains to explain how it will retain the iiNet brand and its sales and customer service teams should its own acquisition be successful.
"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," CEO Geoff Horth said on Monday.
"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."
On the financial side -- the side iiNet's board will be most concerned about -- the difference between the two deals is that one was made as a cash offer, and the other as a merger.
Unlike TPG, two iiNet directors would also be invited onto the M2 board in a move that would be aimed at making sure the iiNet culture and brand is retained post-merger.
Whichever way iiNet ultimately goes, it will change the industry as we know it. The result will be creating the second-largest fixed broadband provider in Australia, easily surpassing even Optus.
We will also see the telco industry shrink even further. At the industry conference CommsDay Summit last week, one speaker raised concerns that Australia's telecommunications industry could soon mirror the banking industry: Four big companies and that's about it.
For those who would like iiNet to remain its own company, unfortunately at this point, with two bidders, it seems even less likely now that iiNet would go it alone.
There are no guarantees that either company will retain iiNet exactly as we know it today, but the competitive pressure now between TPG and M2 will make the next few months much more interesting for the future of iiNet.