M2 plans more acquisitions after strong result

SMB-centric telecommunications provider, M2, is plotting more acquisitions after experiencing a significant financial windfall in its first-half.

In its half-yearly financial results ending December 31, 2009, revenues hit $188 million compared to $87m in the previous corresponding period, a spike of 156 per cent. Pre-tax earning reached $15.3m, more than double last year’s figure, while net profits sat at $8m, compared to $3m from the previous corresponding period.

M2 CEO, Vaughan Bowen, credited the result to successful amalgamation of recent acquisitions, along with organic growth and improved business efficiencies. The telco bought the SMB unit of communications integrator, Commander, in June last year for $19m. M2 also purchased People Telecom in 2008 to build a stronger presence in Sydney.

“We tightened up business operations, making it more efficient in terms of cost,” Bowen said. “We also improved our overall wholesale buying position in terms of volume because we are a much bigger company now and can buy more at once.”

While some redundancies were made to get rid of duplicate roles caused by the acquisitions, M2 has gone from 170 staff to 430. The number of wholesale and retail resellers on its books also increased to 350.

According to Bowen, M2 emerged from the global financial crisis unscathed thanks to the resilience of its target market.

“Our result is an impressive statement on the strength of Australia’s SMBs,” he said. “We had very little business failure incidents and the amount of debts owed to us… were all kept in very good order. In fact, it’s better than the previous year.

“The Australian SMB market is a more resilient tiger than people might have thought it was.”

With the strong financial outcome, M2 is sniffing out further acquisition opportunities. Bowen said there were a “handful” of potential companies but would not disclose the details.

“We hadn’t been looking for acquisition for 7-8 months since we were very conscious that the business settled in with the new acquisitions,” he said. “But now it is actually starting to come together, we have been more active in looking for opportunities but we are very conscious that any acquisitions have to fit directly with our core business which is the SMB market.”

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