ASX-listed internet service provider Eftel joined the exclusive 100K club last week when shareholders approved the company's merger with ClubTelco.
The move affirmed newly appointed Dodo executive Scott Stavretis as chief of telco and effectively doubled the company's combined customer base to 120,000 subscribers, becoming the seventh telco to do so.
Perhaps most importantly, the merger brought competitors Primus and to a lesser extent Internode into the merged company's sights as the larger customer base brought with it increasing economies of scale.
The Eftel/ClubTelco marriage is the latest in a string of mergers. The wider national market has undergone a continued consolidation as small and medium players alike merge or sell up in an effort to increase market share or off-load the uncertainty brought about by the build of the National Broadband Network.
Melbourne-based provider IF Telecom has taken the impending, $36 billion national network as an opportunity to snap up very small, sub-1000 subscriber service providers. The company hopes to reach a base of 10,000 customers in coming years.
The company, founded by two brothers in 2005, currently has 3000 customers. In the past year the small telco has experienced a sudden shift from organic growth to a fast-paced mergers and acquisitions strategy, acquiring the customer bases of five service providers spread across NSW and Queensland. Targeted ISPs had between 100 and 850 customers each.
IF Telecom plans at least two more acquisitions in coming months, with some targets even conflicting with the acquisition interests of the much larger iiNet.
Managing director Andrew Branson told iTnews that the smaller company's strategy was clearly aimed at resisting the price pressures of the NBN and capitalising on the fears of those that did.
Continuing uncertainty around the network, despite legislation passing through Parliament and the recent deal with Telstra, has become one clear motivation for acquisition targets to sell at modest prices.
"They've got solid businesses and they tend to have been in the market for more than ten years," Branson said. "They've got a loyal customer base but... it's just that big unknown - they're worried they're going to be too small to play in the NBN arena.
"We're playing ourselves into the position where we certainly shouldn't be priced out of the market."
Telsyte analyst Chris Coughlan said the market was ripe for such acquisitions.
"If you get an offer from someone to acquire you and they're paying you a good premium on goodwill, then maybe it's a good time to bail, based on fundamental uncertainty," he said.
IF Telecom is yet to begin trialling NBN services but hopes to grow to a stage where the pricing models offered by NBN Co and sub-wholesalers are attractive enough to warrant the transition.
In the meantime, there are plenty of acquisition targets.
Over the past decade, the ISP market has become significantly smaller, from a height of 889 players in 2001 to just 501 now, according to Telecommunications Industry Ombudsman membership collated by DigEcon Research.
The Australian Bureau of Statistics, based on TIO figures and its own survey, has more recently estimated approximately 400 ISPs in the industry, with only a quarter of these counting 1000 or more active subscribers. The remaining 300 or so companies account for just one percent of all Australian internet subscribers.
More recent research from iiNet suggested the market had shrunk to as little as 250 providers, with the provider's chief executive stating that only four companies were of a reasonable size.
The Perth-based company has itself embarked on an ambitious mergers and acquisitions strategy that has placed it as third largest broadband and second largest DSL provider in Australia. Acquisitions of Netspace, the consumer base of Telecom NZ-owned AAPT and regional Western Australian ISP Westnet have shaped iiNet as the premier challenger broadband brand; a flag once borne by Optus.
At the smaller end of the market, however, ISPs are dropping at a much quicker rate.
Some, like Branson, believe the NBN has spurred the market's recent consolidation, a notion that mirrors past significant technological changes in the market.
The first significant drop in ISP numbers during the past decade, between 2001 and 2002, coincided with the entrance of DSL technology and the gradual transition away from dial-up consumer and business services.
Regional service providers at the time complained of Telstra's restrictive wholesale pricing that forced small and particularly regional ISPs into other internet-based services and away from the ageing dial-up technology in order to retain their customer bases.
Regional players solidified
Arguments around wholesale pricing from the incumbent continue to run rampant today, but Eftel's executive chairman Simon Ehrenfeld agreed the NBN could easily become a second catalyst for another round of consolidation, particularly among small ISPs.
"NBN may be acting as a catalyst - it adds another piece of uncertainty for people," he said. "But in any case the need to scale up is becoming more and more pressing.
"If you look at other industries, they do tend to scale. There's no doubt the players who get themselves more establishment and get better buying power, better marketing presence do get themselves an advantage over smaller players."
Though some have warned of the cost pressures under the NBN pushing out service providers smaller than 250,000 customers, Ehrenfeld argued the NBN could actually serve to cement regionally-centred providers.
Those that chose to provide services only to key regional locations would, even under a distributed, 121 point of interconnect model under the network, be able to build a loyal customer base centred around key differentiators such as service and local support.
But service providers of all sizes would be challenged in providing the services required from the NBN, such as a base voice capability, in the face of larger telcos and the possible introduction of household brands into the fold.
"The days are over, I think, are for the very small providers going ahead without the bigger players," Ehrenfeld said.