Speculation about a deal that could see national broadband provider, iiNet, pick up a chunk of embattled Telecom New Zealand subsidiary, AAPT, has intensified after it called a trading halt to its shares.
The company filed a trading halt with the Australian Stock Exchange (ASX) that reads: "The securities of iiNet Limited [the 'Company'] will be placed in pre-open at the request of the Company, pending the release of an announcement by the Company. Unless ASX decides otherwise, the securities will remain in pre-open until the earlier of the commencement of normal trading on Monday, 2 August 2010 or when the announcment is released to the market."
iiNet chief executive Michael Malone has so far declined to comment on a possible AAPT deal.
iiNet’s name has been linked by The Australian newspaper to a possible transaction involving AAPT.
“It is believed iiNet has submitted a proposal that could see AAPT’s retail and wholesale arms sold as separate entities,” the newspaper reported.
Rival broadband specialist, TPG, has long been named as a potential acquirer of AAPT. Both iiNet and TPG have a strong history of acquiring other ISPs in the Australian market to fuel growth.
For those unfamiliar with share trading terminology, when a stock goes into 'pre-open' it means it is under a temporary trading halt.
The NAB online trading site says this occurs every day prior to the market opening to allow buyers and sellers to enter and amend orders. Stocks can also go into pre-open during market hours. This is usually prior to the release of price sensitive information by a company and often allows all market participants a period of time to digest the information and enter/amend orders onto the market.
Both iiNet and TPG have been extremely active in acquiring other telcos and ISPs over the past few years. In late March, iiNet confirmed it would acquire fellow tier-two ISP Netspace, in a transaction valued at $40 million and funded entirely through debt.
It had only been two years since iiNet’s last major acquisition — fellow Perth-based ISP, Westnet.
And TPG hit headlines last year with the buyout of fibre player, Pipe Networks, in a deal which gave TPG — primarily a retail service provider — a significant wholesale fibre footprint around Australia.