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iiNet: TPG won't trash our brand

Like Volkswagen buying Porsche, TPG will want to retain the quality of iiNet for the money it is offering for the deal, according to iiNet chairman Michael Smith.
Written by Josh Taylor, Contributor

iiNet chairman Michael Smith has said that while TPG is free to do what it likes with the iiNet business once a takeover is completed, the company would likely want the telco to maintain the same level of customer service to ensure it gets a return on its investment.

"[TPG is] paying many hundreds of millions of dollars for a customer group, and a company that has been very successful in winning and keeping customers through service," Smith told journalists on Wednesday.

"It's like Volkswagen buying Porsche -- if you tried to turn Porsche into a Volkswagen, you would destroy the brand. If TPG didn't run iiNet like it has been run in terms of its capacity to deliver service and attract customers because of that brand proposition, they're placing at risk the amount of money they've paid -- the significant premium."

TPG this morning raised its offer for iiNet to AU$1.5 billion, with the iiNet board recommending the new TPG offer above the M2 offer made last week.

While M2 has a right to recontest, Smith backed TPG's bid and said TPG founder David Teoh would want to keep iiNet's brand and customer service to the levels customers expect.

"[He's] not buying this business to destroy the thing it is famous for. There's an argument that he is the most successful telco entrepreneur in the country, and you wouldn't get there without being very careful about your investment."

Smith said the interest in iiNet from multiple bidders came because it is "the best piece of fruit in the bowl".

"With the NBN and access to bandwidth becoming more equal, then the ability to be a stand-out customer brand, we think, becomes more important," he said.

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