iiNet to shut down Melbourne office

iiNet to shut down Melbourne office

Confirms another one of its offices will soon close

TPG (ASX:TPM) subsidiary, iiNet, will soon shut down its Melbourne office, downsizing its operations in Australia yet again.

iiNet general manager of customer service, Mat Conn, told ARN that the company will be closing the doors of its Melbourne business in the coming weeks, with the company “still in the process” of determining the future of staffing in that office.

According to a report on Lifehacker, a former iiNet employee said that most staff at the iiNet Melbourne office were given redundancy packages. The publication reported that around 60 employees would be affected, constituting the majority of the office's existing workforce.

Conn told ARN that the downsize effort is in line with the Sydney office closure, which occurred in December last year.

“That has been the case with the Melbourne site. The Melbourne site itself, through the redeployment and seeing staff leave, had come to a size where operationally, there were limitations as to how it could be utilised.

“We still hold a significant presence in Australia and New Zealand, and our Cape Town office, and that hasn’t changed,” he said.

According to Conn, the company has “no further plans” to close any of its other remaining A/NZ sites.

“There has been some reports in the past saying that headcount has dropped, but the reality is that the actual headcount across our contact centre network now is higher than it was at the time of acquisition,” he added.

TPG indicated its intention to acquire iiNet in March 2015 for about $1.4 billion, where under the proposed transaction, TPG would acquire 100 per cent of the fully diluted share capital in iiNet that it did not already own (TPG initially owned 6.25 per cent of iiNet) by a scheme of arrangement.

In August 2015, the Australian Competition and Consumer Commission (ACCC) gave the company the green light to its proposed acquisition of iiNet. Following the acquisition, iiNet de-listed from the ASX on 11 September 2015.

Also in 2015, Delimiter reported that TPG and iiNet quietly shut down the call centre that supported ACT and Victoria-based ISP, TransACT, making its entire staff redundant and redirecting calls to its other call centres in and around Australia.

“With pressure and the NBN, we need to streamline our business and put in place a site structure that we can invest in and remain stable,” Conn said.

On 21 March, ARN reported that iiNet continues to pay dividends for the company, with its latest half-yearly financial results revealing an earnings surge from the freshly integrated business.

iiNet contributed pre-tax earnings of $141.7 million in the first half of the 2017 financial year, compared to $107.1 million for the five and a quarter month period since it closed its acquisition of iiNet in the first half of the 2016 financial year.

According to TPG, iiNet’s $34.6 million growth in the first half of the 2017 financial year was “partly pushed up” by $14.7 million in organic EBITDA growth for the period, and $4 million of integration costs that were incurred the previous year, but were absent in 1H17.

ARN also reported that according to TPG, as of 31 July 2016, iiNet delivered a “maiden contribution” of $248.9 million in the 11 months since its acquisition, but also ate up $6.3 million of restructuring costs from integration activities associated with the acquisition.

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