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Internet service providers

eisa Set to Acquire OzEmail in Multi-Million Dollar Deal

Strategic Insights

— 1 min read

Australian Internet minnow eisa Ltd appears poised to outmaneuver Telstra in the bidding war for OzEmail, Australia's second-largest dial-up Internet service provider. Sources close to the parties involved have confirmed a deal is expected to be announced today, with eisa buying OzEmail for between $300 million and $350 million. This acquisition would give eisa access to OzEmail's 380,000 customers, in addition to its own 100,000 subscribers, and provide a rich stream of online content, catapulting the combined company to a revenue of about $200 million.

Key Takeaways:

  • eisa is set to acquire OzEmail for between $300 million and $350 million, thwarting Telstra's ambitions to dominate the dial-up Internet market.
  • The acquisition will be announced to the stock exchange today, following approval by the boards of eisa and OzEmail owner UUNet.
  • eisa has big ambitions to become an Internet powerhouse in the Asia-Pacific region, and buying OzEmail will achieve two key planks of its growth strategy.
  • The combined company will have a revenue of about $200 million, making it Australia's largest residential dial-up ISP, surpassing Telstra's Big Pond with 460,000 customers.
  • Telstra's bid for OzEmail was scotched by the Australian Competition and Consumer Commission due to significant competition concerns.
  • eisa, on the other hand, is unlikely to face the same competition barriers, given its smaller size and likely equity-based offer.

Statistics:

  • eisa's market capitalisation is approximately $65.5 million, making it a tiny minnow compared to Telstra.
  • eisa's shares have only briefly touched their $1 issue price since listing in August last year, and have soared 26 percent to $1.09 following speculation about the buyout.
  • OzEmail has 380,000 customers, in addition to eisa's 100,000 subscribers.
  • The combined company would have a revenue of about $200 million.
  • Telstra has about 460,000 customers through its Big Pond ISP.

Sources:

  • "eisa set to trump Telstra in OzEmail bid," Australian Financial Review, January 1999 (unnamed source)
  • "eisa shares rocket on speculation," Australian Financial Review, January 1999
  • "Telstra's OzEmail bid shelved," Australian Financial Review, January 1999 (Australian Competition and Consumer Commission)
  • "eisa's growth ambitions," eisa Ltd press release, January 1999

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