iiNet investors have revolted over rival TPG's $1.4 billion takeover bid.

Investors including iiNet founder Michael Malone are angry that the company's board recommended the offer.

He called for shareholders to reject the takeover bid and he wants the board to step down.

Another substantial investor Paul Hannan from BT Investment Management was critical of the board for not formally putting the company up for sale.

The iiNet board announced the TPG takeover bid less than two weeks ago.

On Monday it was forced to hold a teleconference with analysts and investors to defend the deal.

iiNet chairman Michael Smith tried to address the concerns.

"There has been some criticism that we did not engage with shareholders in relation to the offer earlier than now," he said.

"I apologise for this.

"Particularly if this delay has caused issues for anyone."

Investors will need to approve TPG's takeover offer in June.

Offer bad for company, staff, customers: Malone

Mr Malone owns about 4 per cent of the company and was scathing of the performance of the iiNet board.

"I believe this deal counters everything that you've said, Michael Smith," Mr Malone said.

"It's incomplete, unprofessional, and reflects poor diligence.

"It's been 10 days since the deal was announced and you now think it's time to talk to shareholders."

Mr Malone said the deal was bad for iiNet shareholders, staff and customers.

Mr Smith admitted that iiNet was under pressure from TPG to make a decision in a little under a week.

He said he understood if Mr Malone is disappointed by the deal.

"I've got enormous regard for your judgment," Mr Smith said in reply to Mr Malone.

"I am apologetic it's taken awhile for us to get to shareholders."

'A week not long enough to consider takeover bid'

Mr Hannan told the conference call that iiNet should be put up for sale.

"I don't believe you could honestly know what the next best alternative is if you haven't opened it up to a market sale process," he said.

"Surely the next job is to make it clear that the business is available for sale."

Mr Smith said the business was on the market.

"There is now a clear price in the market," he said.

After the call, Mr Hannan told the ABC that iiNet's explanations about the takeover bid were dreadful and its approach showed a lack of thought.

iiNet shares fell more than one per cent on Monday to $8.85.

Fund manager Roger Montgomery from the Montgomery Fund agreed that a week was too short for iiNet's board to consider the takeover bid.

"That's a criticism that is valid," he said

"Increasingly we as professional investors are given less and less time to assess proposals, whether its a capital raising or a bid."