Orcon buys rural ISP as industry shakes down

New Zealand's fifth-largest internet service provider, Orcon, stepped up industry consolidation last week by snapping up rural provider Wise Net.

Financial details of the deal were not disclosed. The Masterton-based ISP is a relative minnow, with an estimated 3000 customers and six staff.

Orcon said the move was about acquiring a quality company rather than adding sheer customer numbers.

"Industry consolidation is just a natural part of telecommunications at the moment," said Scott Bartlett, general manager of regulatory affairs at Orcon.

"It's not about buying companies just for the sake of buying companies, we just want to buy the best and the brightest."

Orcon has just under 20,000 broadband customers, ranking it fifth in high-speed internet provision behind Telecom's Xtra, TelstraClear, iHug and CallPlus.

An estimated 40 per cent of Wise Net's customers are on broadband, with the remainder on dial-up.

Bartlett said the acquisition was also part of Orcon's strategy to expand into rural services.

The company plans to launch further rural broadband on the Thai-owned IPStar satellite in a few weeks, he said.

With more than 60 ISPs in New Zealand, most of which are small players, analysts expect consolidation to accelerate once the Government revises competition rules by the middle of the year.

Earlier this year, number-three player iHug snapped up Quik Internet. The company has promised to acquire more ISPs if the Government goes ahead with unbundling Telecom's local loop.