TPG swoops up iiNet as the streaming wars get more complex

The steady rise of iiNet on the ISP domination front over the two decades has been a triumph for the notion of tech start up longevity. TPG Telecom has made an AUD$8.60 per share bid for iiNet, valuing the company at $1.4 billion. Significantly, iiNet’s humble beginnings out of founder Michael Malone’s garage is also a testament to the evolution of the broadband sector.

The long anticipated acquisition of iiNet by TPG , will not only make the new combined entity bigger  that the current number two, Optus, but also add more heat in the increasingly competitive IPTV space.

Currently iiNet is a key reseller of FetchTV, which Optus also resells, while TPG has secured a deal with Foxtel. Adding a further layer of complexity, FetchTV has partnered with incoming streaming player Netflix. The deal will see Netflix’s app housed on Fetch’s platform.

The Australian Competition and Consumer Commission (ACCC) will be scrutinising the deal across a number of levels and IPTV competition is sure to be central to that.

For TPG, iiNet represents scale as it was nudging Optus as the second biggest provider of fixed-line broadband services. It also offers network diversity as iiNet’s Perth-based network with tentacles to South Australia courtesy of its prior acquisition of Internode and Adam Internet, will considerably expand TPG’s primarily east coast reach. he purchase will also increase TPG’s broadband subscriber base to over 1.7 million customers, while it delivers scale benefits in an NBN environment.

iiNet provides over 1.9 million broadband, telephony and IPTV services to almost one million broadband customers and has over 60,000 NBN and fibre subscribers.

However, the details of what services will be retained or morphed are still to be determined. TPG executives have already said that they want to keep the iiNet brand.

Late last year, TPG confirmed that it had licensed or ‘white labelled’ some of Foxtel’s television channels. At the time, industry speculation suggested that TPG was gearing up to launch its own premium IPTV service from early 2015.

TPG’s network has been IPTV ready for over five years using multicast technology, but had always lacked  the content. The merger with iiNet may solve  that content issue but create a raft of new ones as they pick the best IPTV content solution for a hotly contested streaming market.