RealTime IT News

eisa Also Waits for ACCC on OzEmail Takeover

Despite being characterised in the media as the David who slew Goliath, Australian ISP eisa will have to wait for regulatory approval before it successfully snatches rival OzEmail from the embrace of Telstra.

eisa confirmed widespread speculation this week that its trading suspension on the Australian Stock Exchange last Friday was due to its announcement that it had renewed its bid to buy the consumer ISP division of OzEmail for around AUS$350 million (US$221 million).

eisa's stock had jumped 30 per cent in early trading on Friday as word leaked out that it would challenge Telstra's AUS$300 million (US$189 million) counter-bid.

The reason that Telstra's bid has not been accepted was a very negative assessment given by the corporate watchdog, the Australian Competition and Consumer Commission, about its misgivings concerning the largest consumer ISP in Australia taking over the second largest. However, the ACCC announced late today that it would also scrutinise eisa's proposal for anti-competitive effects.

"Based on information that the ACCC has available to it, the proposed acquisition would give eisa a market share in the region of 20 per cent in the provision of retail Internet access services," said Professor Allan Fels, chairman of the Commission. "The ACCC intends to undertake market inquiries into this proposed acquisition to determine whether it is likely to substantially lessen competition in breach of the merger provisions of the Trade Practices Act 1974."

While there was little doubt that Telstra's proposal had significant weaknesses against the ACCC's arguments, the outcome of the Commission's deliberations on eisa's proposal is far less certain. eisa would become the largest provider in Australia if it added OzEmail's 350,000 customers to its own 100,000 subscriber base, edging out Telstra's 400,000 users.