iiNet and iHug Join Forces

iiNet, Australia's largest regional Internet Service Provider (ISP) will be combining with New Zealand based ihug to form a trans-Tasman Internet and communications company boasting 300,000 customers.

"We are extremely excited about this deal," said iiNet Managing Director Michael Malone. "The two businesses could not be a better fit. iiNet and ihug share very similar backgrounds and business objectives and both companies have a strong focus on providing a high standard of customer service and value for money."

ihug is one of Australia's top ten Internet Service Providers and is the third largest ISP in New Zealand. Established in Auckland in 1994, ihug expanded to the east coast of Australia in 1998. ihug today has approximately 170,000 active Internet and voice services across Australia and New Zealand.

iiNet was established in Perth in 1993 and launched onto the east coast in 1999. iiNet has built its core business on referral. It has expanded on the east coast through acquisitions and the recent introduction of bliink broadband products

iiNet now has a customer base of 130,000, and is the #2 provider of broadband ADSL in Australia.

"Both iiNet and ihug have a well established customer base in dial up markets and both are rapidly growing their broadband products and services," said Mr Malone. "ihug also has a competitive voice business, which is an area that iiNet has long been keen to expand."

The transaction will cost iiNet $30.1 million dollars in cash and a further 23.7 million in iiNet shares issued to the owners of ihug. Completion of the transaction is expected during the third week of October, following a meeting of iiNet shareholders.

All staff from iiNet and ihug will be retained when the companies join forces in late October.

The company will operate under both brands in Australia and under the ihug brand in New Zealand, with services remaining evenly distributed across Western Australia, the east Coast of Australia, and New Zealand.

Mr Malone said the focus of the two companies in the future would remain on providing customers with an affordable range of Internet related products and services. "Combining these organizations is all about establishing a successful partnership between two independent ISP's, who are looking forward to growing in size as a means of providing customers with access to an exciting range of innovative products and services at a competitive price."

CONTACTS
Michael Malone
MANAGING DIRECTOR
Phone: 08 9214 2207
mmalone@iinet.net.au