IINET has said that it has entered into an agreement to acquire Adam Internet for $60 million after Telstra failed in its bid to acquire the firm.
The agreement comes just weeks after Telstra scrapped its plans to acquire the budget broadband brand from South Australian as the company was unable to convince the regulators that the acquisition would not affect competition. The regulators have said that the acquisition would give Telstra an unfair advantage over its rivals.
Telstra's competitors and the Australian Competition and Consumer Commission expressed concerns that would use its acquisition of Adam to undercut its rivals' offers and gain an unfair advantage. They said that the company will use favourable wholesale supply deals to unfairly compete with rivals in the market.
The regulator have not expressed any such concerns for the deal with iiNet and has already given its go ahead for the deal. iiNet will be able to expand its customer base by 70,000 broadband subscribers in South Australia and the Northern Territory to a total of 900,000. Adam is expected to generate revenue of $55.0 million and EBITDA of $11.5 million during the financial year 2014 and the it will be included in iiNet's earnings per share from next year.
iiNet's chief executive Michael Malone said, "Like iiNet, Adam Internet has a loyal customer base and strong reputation in its core markets. This acquisition further builds on our strategy to grow scale in the national residential and business broadband segments."
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