ispONE drowning in debt

Collapsed ISP ispONE is attempting to sell off the profitable part of its business in an effort to pay back tens of millions owed to around 80 creditors. 

The company launched a pre-paid services business late last year, using the network of partner Telstra in a partnership with Kogan Mobile that ultimately saw all three parties engaged in legal action after ispONE failed to accurately forecast customer take-up and usage rates.

“The company grew rapidly and exponentially which placed stress on its unviability," ispONE’s administrators Ferrier Hodgson said.

“The inaccuracy of forecasts and numbers contributed to unprofitability. Assumptions had not been realised and estimates were too low compared with actual figures.”

The ISP was taken to court by Kogan for cutting users off from the service without warning and not delivering SIM cards. It took Telstra to court over an unpaid bills claim.

Minutes from a recent creditors meeting reveal ispONE suffered a $1.8 million loss in 2012 and a $7 million loss this year following its decision to launch pre-paid mobile services with Kogan Mobile.

Telstra has submitted a claim for around $31 million in debt payments. ispONE’s administrators said preliminary investigations indicated Kogan Mobile was owed up to $40 million, with Kogan submitting a claim for more than $44 million.

The pair are just two of around 80 creditors seeking reimbursement from ispONE’s administrators. Also included in the list are AAPT, Optus and Cisco.

The profitable part of ispONE’s business, its fixed services unit, is currently being marketed out to potential buyers.

ispONE’s administrators revealed 29 parties had come forward with interest to acquire ispONE’s iBOSS billing platform, with 5-6 signing non-disclosure agreements and considered serious buyers.

ispONE registered "iboss international" as a new business during the legal action with Telstra.

The administrators said they were considering whether proceeding with the lawsuit ispONE kicked off against Telstra last month would be in the creditors’ best interests.

ispONE had claimed Telstra engaged in unconscionable conduct by making representations to the wholesaler that it would match call and data pricing offered by Optus as part of the deals it was seeking to strike with Kogan Mobile and Aldi.