Update: M2 buys Clever selected SMB assets

M2 Telecommunications (ASX: MTU) is set to acquire SMB related business assets of fixed-wireless ISP, Clever Communications (ASX: CVA).

According to a statement, Clever is selling off its SMB customer contracts for off-net fixed line, mobile, data and virtual private network (VPN) services. The deal is worth $5 million and was executed today.

SMBs are the life-blood of M2, which last year bought out struggling integrator, Commander’s SMB assets and acquired People Telecom.

While discussions between the two parties had been going on for some years, Clever’s decision to sell the assets in January was timed well for M2.

“If it was six to nine months earlier I probably would have said no because we were busy digesting the acquisitions [of Commander and People Telecom],” M2 CEO, Vaughn Bowen, said.

He could not specify the exact number of contracts to be acquired but estimated it to be in the thousands.

“They are generally high value business contracts because they are small businesses with very large data skew,” Vaughn said. “So there is a high portion of customers with business-grade data services and those services will be migrated on our network.

We will be able to use it more thoroughly and soak up excess capacity on our network.”

M2 will acquire all property, plant and equipment of Clever required to service the acquired customers. The company will also take on Clever’s dealers and agents specific to SMB customers.

“A lot of the dealers are system integrators and data specialists so what we are doing is adding depth in our dealer channel in the marketplace to help us sell data network customers on our own network,” M2 CEO, Vaughn Bowen, said.

Only a handful of Clever staff will be taken on as major functions such as customer service and provisioning will be absorbed by the telco’s business.

The agreement is expected to boost M2’s earnings before tax by a minimum of $2.3 million.

The telco will commit to a wholesale agreement with Clever for its business-grade wireless data service retained by the ISP.

During the stipulated six-month transition period, M2 will be able to use the Clever brand. The assets will then be likely to be marketing under the People Telecom brand, according to Bowen.

The sale is expected to be done by May 1.

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