Mobile carrier Vodafone has bought the ihug-branded New Zealand operations of telco iiNet for AU$36 million.
iiNet had been looking to sell the business since July this
year. The company is understood to have rejected NZ$30 million (AU$26.5 million) and NZ$36 million (AU$31.8 million) offers from NZ Internet service providers Orcon and Compass Communications respectively, with state-owned company Transmission Holdings understood to be one of the last bidders also in the race.
ihug is the third-largest Internet service provider in NZ with over 120,000 services, behind Telecom New Zealand and Telstra's Kiwi business TelstraClear. iHug's original Australian customers have been integrated under the iiNet brand and will remain with the telco.
ihug is positioning itself to take on Telecom in its home phone market, moving from Internet service provider to telecommunications company following the government's decision in May to open up Telecom's fixed line network to rivals.
ihug has about 8 percent of the broadband, or fast Internet, market and expected all its services to be at that level within a year.
It's only been three years since iiNet bought the Australian and New Zealand operations of ihug, but iiNet has suffered recent financial setbacks and is re-focusing on its core Australian market.
Announcing the sale in a statement issued to the Australian
Stock Exchange this afternoon, iiNet said the sale was expected
to be complete within two weeks.
iiNet chairman Peter Harley described the sale as "a fair
price", adding the funds would be used to reduce iiNet's bank
debt and for working capital to continue expanding iiNet's
business Down Under.
iiNet said it will retain its Auckland-based call centre under
the deal, with around 100 staff.
ihug's other employees are expected to be retained by
In a statement, Vodafone NZ chief executive Russell Stanners said ihug would operate as a standalone company, with Vodafone itself remaining focused on mobile services.
© 2006 Australian Associated Press
Pty Limited (AAP) or its Licensors. This is the ZDNet Australia
TM service with content provided by AAP. AAP reserves all rights,
including copyright, in services provided by it. The information,
text and images in the service are for personal use only and may
not be re-written, copied, re-sold or re-distributed, framed,
linked or otherwise used whether for compensation of any kind or
not, without the prior written permission of AAP.
This service is published for information only without assuming a
duty of care. AAP is not in the business of providing
professional advice, and gives no warranty, guarantee or other
representation about the accuracy of the information or images
contained in this service. AAP is not liable for errors,
omissions in, delays or interruptions to or cessation of the
services through negligence or otherwise.
The globe symbol and "AAP" are registered trade marks.