iiNet to grow B2B footprint in 2014

Broadband provider iiNet will eye acquisitions in the B2B sector following the buyout of Adam Internet, which brings its 20-year acquisition spree in the retail space to an end.

The Perth-based ISP has acquired 40 companies since it was co-founded in 1993 by current managing director Michael Malone.

But the old M&A strategy in fixed-retail line broadband is over. "The news is that the previous formula is pretty much done," Malone told CRN.

The rest of 2013 will be focused on bedding in this month's Adam Internet acquisition, but iiNet will ramp up its attentions on the business-to-business space in 2014, said Malone.

"The business market is still very fragmented, so there are still dozens, if not hundreds, of B2B players," said Malone.

"Our cookie-cutter model was acquiring businesses that looked like us – that offered standard products to many customers. But in the B2B space, it is very bespoke, such as hosting, data centres and software as service (SaaS)."

The company already has some presence in B2B, said Malone. "We accumulated $100 million of B2B revenue organically and went up over $200 million with Internode and TransACT."

Malone said that the integration of Adam's customers takes iiNet's market share in fixed line retail broadband in South Australia up to 35%, not far below Telstra's estimated share of 40-45%.

The Adam Internet deal only came to pass because Telstra withdrew its bid for the ISP following concerns from the ACCC.

At a drinks event in Sydney to celebrate iiNet's 20-year anniversary, Malone explained how iiNet used its focus on customer service to go head to heard with its larger telco rivals. iiNet puts a high value on Net Promoter Score (NPS), a metric showing how likely a customer is to promote a company to their peers.

Malone revealed that a 1% increase in NPS equated to a $1.6m increase in iiNet's net profit after tax.

Meanwhile, he explained that iiNet's customer service team is its "heroes" – iiNet claimed that a 0.1% improvement in customer churn added up to 20% recurring improvement in sales.