Internode itching to leverage iiNet scale in NBN battle

The founder of Internode, Simon Hackett has promised not to go “riding off into the sunset” following the completion of iiNet’s acquisition of his company, but will instead be kicking “some serious ass” as he works directly with iiNet CEO Michael Malone.

In an extensive blog post explaining the acquisition, Hackett stresses that he will be leveraging his position as a 7.5% stakeholder in iiNet.

The shareholding, following the completion of the deal, secures Hackett a spot as a top-ten shareholder in the listed group.

“Because I’m retaining an ownership stake in both Internode and in the rest of the iiNet group, my financial interests are aligned with those of the group. I’m committed to its future and I’m putting (well, keeping) my money where my mouth is,” he writes.

Hackett, who also stays on at the helm of Internode, says that while it will be “business as usual” that does not mean “no change”.

He states that that the bilateral benefits of the transaction have been scale which will assist in competing in a post NBN environment. Competing solo in an NBN world would have consumed 10% of the Internode’s gross income and most of its annual operating profit, he explains.

Hackett estimates that it will cost around AU$20 million per annum to operate an ‘empty network’ on the NBN once the NBN has all of its 121 points of interconnect deployed.

“That running cost is just the price of admission, the price to run an empty network, before you add a single customer to it,” he points out.

“The next decade is going to be one in which the consolidation of the market and the pressure on operating margins driven by competition will put more and more pressure on market players to be extremely efficient in terms of overheads per customer. There is only one way to do that – with very high operating scale,” he warns.

Hackett also states that one of the best outcomes of the merger will be the constructive interconnection of the iiNet and Internode DSLAM networks, and also in the constructive interconnection of the iiNet and Internode IP transit networks.

Both carriers use the same Ericsson supplied ADSL2+ gear and Broadsoft’s Broadworks core VoIP platform, which will simplify network interconnection.

“Internode customers will be able to access direct ADSL2+ ports for our Easy Naked and Easy Broadband services everywhere that iiNet has hardware deployed. That’ll massively increase the geographic reach of our ADSL2+ and fetchtv full services,” he notes.

He adds that it will also cement the groups’ anticipated “leadership’ position in NBN service provision by allowing seamless LNP for customers. ®