Virtual Communities has purchased AustarMetro, Austar's metropolitan Internet business, for an undisclosed sum, picking up more than 21,000 customers in the process.
Austar's prepaid Internet product, which is distributed by Urban Internet and third parties, is included in the purchase.
Ravi Bhatia, Virtual Communities' executive chairman, said AustarMetro staff will be offered positions on the Virtual Communities team. He said there would be no change or interruption to the ISP service or customers as a result of the transfer of ownership.
Austar CEO John Porter said the AustarMetro business is a profitable operating unit, however it falls outside of Austar's rural and regional focus.
The AustarMetro brand name will be retained for the time being.
This is Virtual Communities' second purchase for the year. The Internet services company bought Exodus Communications' Melbourne-based Web hosting facility, GlobalCenter, for $4 million after Exodus filed for Chapter 11 bankruptcy in the US. The replacement price of the facility is $22 million.
Virtual Communities, which became profitable this year, has achieved the seemingly impossible feat of turning around a $22 million loss posted in October 2001.
Bhatia, the founder of Primus Telecommunications, was brought on late last year to stem the company's losses. He was quick to shut down the portal business, which he said was exclusively responsible for the company's losses.
Virtual Communities has since completed a 95 million stock buy-back at 8 cents and 10 cents. The company retains 480 shareholders and has sold over 50,000 PCs this year alone.