iiNet hits the acquisition trail again

Perth-based ISP, iiNet, has entered into an agreement to acquire the Internet services arm of Melbourne-based IT retailer, Virtual Communities.

The ASX-listed company said the buy-out would add 50,000 dial-up customers to its books, along with 2500 broadband subscribers across Victoria, Queensland and NSW.

Although the purchase price has not been disclosed, iiNet said the deal would be comparable to its $6.3 million acquisition of the FlowCom ISP business earlier this year. The ISP will pay for the business in cash.

iiNet public relations manager, Louise Runkle, said Virtual Communities represented a good opportunity for the ISP to further expand its customer base and support services.

"Virtual has a healthy revenue stream from its 50,000-strong customer base," she said.

The company's existing call centre in Melbourne also allowed iiNet to round out its existing network of support facilities in Auckland, Sydney and Perth and help service Victorian and Tasmanian customers, Runkle said.

In an ASX statement, iiNet said it would offer employment to all personnel currently working for the Internet services division, including call centre staff. This incorporated about 55 employees, she said.

Runkle said Virtual now operated services under seven brand names. Several of these resulted from recent acquisitions made by the ISP, including the ISP, Big Blue.

iiNet would not be rebranding any of these existing services at this stage, she said.

"We won't be forcing customers to upgrade immediately to an iiNet product," she said. "But as a customer's contract comes up for renewal, we will be offering a comparable iiNet service."

The transition was expected to take six to seven months, Runkle said.

iiNet's acquisition of Virtual Communities is the latest in a string of company buyouts undertaken by the ISP. Prior to its acquisition of FlowCom in February, iiNet purchased the iHug business in September last year for $30.1 million. It also acquired several regional-based ISPs in 2003.

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