SOE thought to be in mix to buy ihug

State-owned enterprise Transmission Holdings, which is looking to grow, is understood to be one of two companies left in the hunt to buy internet service provider ihug.

A deal is expected by the end of the month, with market talk putting the price at $40-$50 million.

Transmission Holdings chief executive Geoff Hunt told the Sunday Star Times the company was interested in growing its business on both sides of the Tasman.

"We've got a continuous process of considering acquisitions but we've got a policy of not commenting until the deal is done," he said.

Today spokeswomen for Transmission Holdings and ihug would not comment on the report.

The purchase of ihug would add a consumer-focused business for the first time to Transmission Holdings, which is well placed to build itself into a serious competitor to Telecom and Vodafone.

The other potential buyer for ihug, put up for sale by its Australian owner iiNet in July, has not been confirmed but speculation has focused on TelstraClear.

Transmission Holdings was established in 2004 and has three operating companies.

One, Broadcast Communications, supplies transmission and linking services to broadcasting and telecommunications industries in this country and says its broadcast network provides coverage to more than 99.8 per cent of New Zealanders.

Transmission Holdings' other two companies mainly provide engineering services to the Australian broadcasting and wireless telecommunications industries.

In June Economic Development Minister Trevor Mallard said SOEs were being encouraged to expand into new areas of business that were linked to what they already did.

They would need to meet strict conditions and their new business must have good spinoffs -- for communities but also potentially for private firms, he said.

"Essentially Cabinet has agreed to consider proposals from SOEs that broaden their scope of business by diversifying their technological, product and market portfolios and then extend the time horizon over which they seek to capture a return on investments."

- NZPA