TPG set to buy SME cloud provider IntraPower for $12.8 million

Telco TPG has made a bid for listed cloud provider IntraPower, offering $12.8 million for the company to help TPG broaden its product range and help to gain new customers in the business and public sectors.

Ovum research director and telco analyst David Kennedy has said the acquisition is an example of how telcos are responding to the National Broadband Network as providers start to consolidate businesses and add new features in order to stand out when the NBN is built.

The TPG move comes after domain name registrar NetRegistry bought troubled hosting provider Distribute.IT, saying its cloud infrastructure would be a valuable asset.

“What is driving this is that telcos are going to need all different types of assets to differentiate themselves. The focus of the competition will shift because the National Broadband Network will effectively act as a monopoly,” Kennedy says.

TPG announced the takeover offer yesterday, providing two different prices – 30c per share or 15c per share and 0.089 shares in TPG. IntraPower, which offers voice, data and IT infrastructure as a service, last traded at 14c per share.

The joint statement said IntraPower chief executive Greg Kennish and chief operating officer Darc Rasmussen have entered pre-bid acceptance agreements over a portion of shareholdings, giving TPG a relevant interest of 19.9% in IntraPower.

TPG chief executive David Teoh said the acquisition would help the company to expand, especially after its acquisition of Pipe Networks.

“TPG’s product set will be further enhanced by the addition of IntraPower’s TrustedCloud offering,” he said.

“The TPG Group’s network and data centre services together with IntraPower’s proven capability will enable TPG immediately to meet the emerging demand from customers for the benefits that can be obtained from Cloud Computing.”

Thirst for cloud computing has strengthened during the past year despite some of the worst hacking attempts in history occurring during the same period.

Businesses want to access faster, cheaper IT systems and telco providers are ramping up their products as a result.

Telstra has started offering Microsoft’s new Office web platform and Optus has been pushing Google Docs – both comprehensive cloud offerings for businesses.

Hundreds of millions have been poured into data centres, with former Pipe chief Bevan Slattery, Amazon and HP all constructing new centres.

Kennedy says telcos and providers are buying cloud infrastructure so they will be able to offer more products when the NBN hits.

“This is just one more example,” he says. “This has similar implications for the bigger operators too. Telstra wholesale will change dramatically … there is going to be a strategic orientation shift across the industry.”

IntraPower chairman Mike Ahern said the deal will see the company’s opportunities to reach new customers “significantly improved”.