Former ispONE owner and telecommunications wholesaler Conec2 has been forced into administration after two of its business divisions collapsed and were sold off last week, leaving behind a debt burden the company's founder said it is unable to carry.
Telecommunications provider Vocus snapped up around 50,000 wholesale and residential customers from former Conec2 businesses iBoss and One Telecom on Wednesday after the pair were ordered by the courts to enter administration.
Vocus is understood to have paid less than $500,000 for the customer base, but is now facing difficulties reconnecting their services - which were switched off after the administration - after suppliers could not be convinced to reinstate them.
iBoss and One Telecom were previously owned by ispONE, until it was acquired by Conec2 in August last year.
Vocus' acquisition of iBoss and One Telecom arose from a recent legal fight between Zac Swindells, the former owner of ispONE; and the current owner of Conec2, Cameron Adams.
The pair went to court battling for control of the retail businesses, in a management deadlock which forced a Victorian court to order both into administration, and which resulted in their subsequent sale to Vocus. The court case is not expected to proceed further.
Conec2 - left without the bulk of its customer base in the absence of iBoss and One Telecom but still owed millions from their unpaid service fees - has now also been forced into administration.
“There’s $4 million owing to Conec2 from iBoss and One Telecom,” Conec2 owner Cameron Adams told iTnews.
“Because they went into administration and [the administrators] sold off all the customers, Conec2 has no way of getting any money back."
iBoss and One Telecom had been supplied AAPT and Telstra Wholesale telecommunications services through a third-party within the Conec2 family of companies.
“We have no reasonable expectation of any substantial money to come from iBoss and One Telecom, and that means Conec2 is carrying those debts to AAPT and Telstra," Adams said.
He said Conec2’s directors had no choice but to enter the company into administration as a result.
Conec2's business - excluding its former ispONE properties - is understood to have previously turned over around $5 million annually.
Following its August 2013 acquisition of ispONE, that figure rose to around $25 million.
Adams said he expected the debt from iBoss and One Telecom to reach up to $6 million once the administrators had completed their work.
After losing the 50,000 customers to Vocus, Conec2 now counts around 2500 small business customers with approximately 5500 services amongst its client base, Adams said.
It had been forced to suspend services this week due to an inability to make supply payments to Telstra for its own customers as a result of the iBoss and One Telecom debt load.
Conec2’s administrators, Jirsch Sutherland, have been contacted for comment. It is currently unclear what will happen to Conec2's 15 employees.
Telstra has declined to comment.