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ISP iiNet reports big jump in profit, but Aussie wireless providers under threat

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An unexpectedly high take-up of “naked” DSL broadband has helped Perth-based internet service provider iiNet boost underlying profit for 2007-08 by 50% to $17.8 million.

An unexpectedly high take-up of “naked” DSL broadband has helped Perth-based internet service provider iiNet boost underlying profit for 2007-08 by 50% to $17.8 million.

The “naked” broadband product, which was launched in November last year, allows customers to get DSL broadband without having to pay costly line rental charges. iiNet says it now has more than 30,000 naked DSL customers.

The total number of customers using iiNet’s online network grew 27% during the period, with the average revenue generated by users hitting $50.40.

iiNet’s total internet subscribers stood at 479,163 at 30 June, including 179,364 subscribers from Westnet, the Perth ISP that iiNet acquired in May for $81 million. iiNet chief executive Michael Malone says the integration of Westnet is progressing well and the goal of achieving $2.5 million in synergies by the end of 2008-09 remained in place.

Revenue increased 9% to $251 million during the period, but Malone hopes to boost sales to $400 million in 2008-09, with the company keen to continue its acquisition strategy if possible.

Malone is also bullish about the proposed introduction of the national broadband network by the Rudd Government.

“Our strength has been the ability to adapt quickly and capitalise on opportunities. The open-access national broadband network will open up market opportunities dramatically, increase customer choice, enable iiNet to access 100% of the market and deliver our innovative products and services to customers.”

iiNet might be riding high, but it appears Australia’s wireless broadband providers are feeling the heat from competition.

The future of iBurst, a subsidiary of collapsed telco and internet junior Commander Communications, is in doubt and industry analysts have told The Australian that Seven Network’s wireless company Unwired will also be under pressure following the introduction of cheap new wireless broadband plans by Vodafone and Optus.

Unwired has dismissed the analysts’ suggestions.

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