Australian eyes Waikato provider

By ADAM GIFFORD

Australian internet provider iiNet is looking to buy Hamilton internet provider Wave in what could be the start of another wave of consolidation in the internet market.

Iinet bought ihug last October, picking up 100,000 customers here and 60,000 in Australia.

Wave has just under 10,000 customers, mainly in Waikato and Bay of Plenty.

Wave managing director David Southall referred queries to ihug commercial manager Guy Nelson, who said he was "talking to a number of parties" and referred the Herald to iiNet managing director Michael Malone.

Malone said it was no secret his company was looking for more NZ acquisitions, particularly companies with a strong regional presence.

"Wave would be on the list we are looking at," Malone said.

Malone said the pace of consolidation was slower in New Zealand than in Australia, perhaps because of the huge market share of Telecom's Xtra.

Wave is understood to be a favourite for acquisition because of its strong regional following.

In February, iiNet bought Froggy, a Sydney provider of cheap fixed-price internet, similar to Slingshot.

Malone said the Froggy brand was being retained, but ihug customers in Australia were being brought over to the iiNet network.

"The value we add in Australia is our network, so we intend to phase out the ihug brand there," he said.

"In New Zealand, the brand is good, but the company was crippled by debt and undercapitalised. We have fixed that and relaunched the brand."

The likely transtasman raid has caught Auckland ISP Orcon Internet by surprise.

Orcon was aggressively buying up small internet companies until it was pipped at the post by Compass in buying Iprolink.

Its acquisitions include AsQuick, BestNet, Hypernet, On-Line Global Internet, SecureNet, valuenet, Zip Internet and Netstream's DSL (digital subscriber line) customers.

Managing director Seeby Woodhouse said that not being able to finalise several large acquisitions has blunted his appetite.

Instead, his energies in recent months had been expended on negotiating a deal to wholesale Telecom services.

Woodhouse said Orcon was only a couple of weeks away from the first Telecom unbundled partial circuit (UPC) offering.

"We have about 50 commercial customers who are ready to take up UPC when it is ready," Woodhouse said.

He said Orcon could improve its margins for data traffic by up to 25 per cent by switching from frame relay to UPC.

With aggressive pricing Orcon has overtaken ihug as the number two DSL provider.