iiNet results show buyouts were about the numbers

One thing is made clear by looking at iiNet's full-year results: buying Internode and TransACT was all about securing customer numbers.
Written by Josh Taylor on

As of 30 June 2012, iiNet has over 824,000 broadband customers, up from 641,000 at the same time last year. The addition of around 230,000 customers from Internode and TransACT was key to that growth.

The purchase of TransACT in 2011 brought 40,000 customers to iiNet, and the purchase of Internode brought in 190,000 customers — but iiNet in total only added 183,000 new broadband customers in the last year.

According to iiNet CEO Michael Malone, the iiNet brand is still adding about 20,000 new on-net broadband customers every half, while its off-net (mainly in regional Australia) customer base is growing much more slowly where Telstra charges more for wholesale DSL than it charges BigPond retail customers.

But that still doesn't explain why iiNet added less customers than it acquired from TransACT and Internode. iiNet said that around 22,000 of the new customers were in fibre and HFC, and that the disparity in the rest of the customer numbers can be blamed on AAPT.

"[It] is a substantial decline in AAPT of about 12,500 customers per half, because we haven't been selling to that base in the last 12 months, and netted off by a significant growth in iiNet over the period," Malone said.

He said that when iiNet bought AAPT, it was a business in long-term systematic decline, though it still has great value for the business. However, because iiNet has not been advertising the brand, customers are still slowly churning off AAPT.

Malone said that he hopes to stem this leakage now that AAPT's customers have been migrated to iiNet's billing system. He said that this would allow iiNet to offer AAPT customers better plans and services than before. In getting rid of the outsourced AAPT billing system, Malone said that iiNet would save AU$5 million per year.

As in previous years, the company is focusing on getting its current customer base to take on more products with iiNet, and said that this is how iiNet managed to get 89,000 new mobile customers in the last two years — just through bundling mobile products for fixed-broadband customers.

iiNet is "jokingly" number one on the National Broadband Network (NBN), too, according to chief financial officer David Buckingham; the ISP has around 2000 customers on the NBN. He said that the bulk of these customers are on fibre, though the company is in the process of adding trial fixed-wireless customers in Ballarat, and Malone said that iiNet is also looking to capitalise on the Australian Broadband Guarantee (ABG) satellite service ending.

"We have an established base of around 10,000 Westnet customers that are on satellite. As they come off the ABG incentive scheme, we're trying to offer those customers the opportunity to come onto the NBN plans, which are more attractive," he said.

"But for now, it is overwhelmingly fibre [customers]," he said.


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