Published on the 02/07/2014 | Written by Newsdesk
The purchase means Vocus is now an integrated provider of fibre, data centre and internet in New Zealand and aims to replicate its successful Australian formula across the Tasman…
ASX-listed telecommunications provider Vocus Communications Limited today announced that it has entered into agreements with the shareholders of New Zealand fibre provider FX Networks Limited to acquire 100% of the issued capital for an enterprise value of NZ$115.8m (approx. A$107.7m).
Vocus, which provides data centre, dark fibre and international internet connectivity to service providers across Australia, NZ, Singapore and the US, claims the acquisition will make it the third largest network operator in New Zealand and “the clear leader in trans-Tasman telecommunications and data centres”.
With the increasing adoption of pay-as-you-go cloud-based services, reliable, low latency, high speed networks are becoming more and more important. FX’s extensive high-quality fibre optic backbone network throughout the North and South Islands of New Zealand, combined with the New Zealand Government-sponsored UltraFast Broadband network, means Vocus will now have extensive fibre reach to across the majority of New Zealand and and expected NZ$13.5-$14.5m of EBITDA in the first 12 months post acquisition, excluding transaction and integration expenses.
Vocus CEO, James Spenceley said: “There exists an exciting opportunity in New Zealand to mirror the success we have had in Australia as the only integrated provider of fibre, internet and data centres. The FX acquisition adds the missing fibre piece to our existing data centre and internet investment in New Zealand.” The structure of the financing around the deal will also provide it with an additional unused debt facility of circa A$40m to continue to seek growth opportunities.
FX CEO, David Heald said, the financial strength and shared culture of Vocus will enable FX to move to the next phase of its corporate development now that it has fundamentally completed the build of “New Zealand’s most modern fibre network”.
Blair Galpin, senior equity analyst at Forsyth Barr said the acquisition is interesting for New Zealand because the national fibre network connecting the most towns is fairly competitive (Chorus, Telecom, Vodafone and FX all have networks) however FX has traditionally been only focused on selling capacity between these main centres.
“With the Vocus acquisition I expect the company to be more focused on complete data solutions, say for government or corporates, so overall this introduces a new player into that end of the market.”
IDC industry analysts Peter Wise and Adam Dodds said: “Vocus have had a pent up opportunity in the New Zealand market for some time. The acquisition is a reflection of Vocus’s focus on an integration between the network and the data center (a similar model of reference is IBM’s Softlayer). Equally Vocus has aspirations for the US market and this purchase is a step in that vision of continued global growth.
