newspaper

iiNet's future in limbo
Fleur Leyden
Telcos
12may06

BELEAGUERED iiNet shareholders may have to wait for another two weeks to discover the state of the company's earnings, with analysts tipping it as a takeover target.

Shares in the internet service provider were suspended from trade on April 20, and the market has since become aware that the company is unlikely to hit its earnings targets.
iiNet, headed by managing director Michael Malone, was meant to provide earnings guidance this week.

Last night it told the stock exchange that it was still working towards a revised earning before interest, tax, depreciation and amortisation guidance for fiscal 2006.

It also said it had appointed GEM Consulting to review the company.









Analysts said iiNet's former full-year $40 million EBITDA target was likely to be slashed to about $30 million.

As its shares are likely to be pummelled once they resume trading, iiNet is likely to attract takeover suitors. One analyst said an Optus takeover made sense as the telco could extract revenue and cost synergies and beef up its broadband subscriber base.

"If Telstra gets fibre-to-the-node up individual ULL (unbundled local loop) players are in trouble," he said. "Maybe with iiNet, Optus would have enough subscribers to warrant its own ULL rollout."

Optus could not be reached for comment last night.

Shares in SingTel, which owns Optus, were unchanged at $2.22.