Aust ISP group to buy backhaul operator PIPE for $344m

Dylan Bushell-Embling
13 Nov 2009

Australia's SP Telemedia, operator of the TPG and Soul ISPs, has offered to acquire backhaul operator PIPE Networks for A$373 million ($344m).

PIPE operates a dark fiber network in Australia’s largest cities and the new PPC-1 Sydney-Guam cable, which concluded construction last week.

The announcement has caused disquiet for many of PIPE's customers - smaller ISPs and data center operators. Many have expressed concern that the acquisition will allow SP Telemedia to charge higher prices for wholesale access to its retail competitors than it does to its own ISP brands.

Comms analyst Paul Brooks toldComputerworld that it is too early to tell whether SP will run PIPE as a standalone business, or merge it into the group.

SP executive chairman David Teoh said the acquisition will help his company transform into a fully integrated operator with a major role to play in the Australian telecom industry.

SP said it has already secured a 19.9% stake in PIPE through the acquisition of options on shares held by two of the latter's directors.

The $6.30 per share offer represents a 15% premium on PIPE's average trading price over the past three months.

The boards of both companies have approved the transaction. If shareholder and regulatory approval is granted, the deal should close by early April 2010.

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