Telecommunications company, amaysim Australia (ASX:AYS), has entered into a binding share purchase agreement to acquire 100 per cent of the shares in ADSL and nbn provisioning and subscriber management company, Australian Broadband Services (AusBBS).
The transaction remains subject to the satisfaction of customary conditions precedent and completion is expected to occur in late August.
Under the terms of the transaction, amaysim will pay $1 million in cash on completion; $1.5 million in amaysim shares on completion (50 per cent of shares received by AusBBS’ key personnel will be escrowed for six months); and $1.5 million in amaysim shares, one year after completion.
The parties have also agreed to a maximum earn-out of $5.45 million payable in cash and amaysim shares.
According to a company statement, the earn-out is subject to minimum and maximum targets in respect of subscriber growth and profitability. It will be measured and paid at the end of the second and third years after completion.
Following the deal, amaysim said, in a statement on the ASX, that this acquisition accelerates its entry into the broadband market.
Amaysim CEO, Julian Ogrin, said AusBBS is a strong fit for the amaysim as it has a keen focus on automating complicated processes and it also enables amaysim to readily launch its own broadband products later this calendar year.
“It is logical for amaysim to enter the broadband market in the next 12 months to take advantage of the likely customer switching behaviour that will stem from the continued nbn rollout," he said.
"Acquiring AusBBS’ technology platform is a way for us to accelerate our broadband strategy, become even more relevant in data-hungry Australian households and bring our ‘less hassles’ approach to broadband."
As part of the transaction, AusBBS’ team of three telecommunications industry experts will join amaysim as employees on completion of the transaction to drive its broadband strategy.
“AusBBS stood out for us due to its mix of scalable and proven technology and a passionate team, who will now join amaysim to grow this business with us," Ogrin added.
"Together we will build amaysim broadband which will extend our relationship with current customers while increasing the potential addressable market for the amaysim brand."
Going forward, Amaysim also expects to grow its broadband subscriber base while maintaining its low cost of acquisition.
In addition, it also expects to benefit from reduced churn through bundling and new opportunities to sell products for the home.
In mobile, amaysim will operate as a virtual network operator, leveraging the existing fixed line networks including nbn.
AusBBS CEO and major shareholder, Rob Appel, said its Cloud-based approach ensures that the business can adapt to new opportunities quickly.
“For the past four years we have focused on creating the most flexible, scalable and efficient platform possible to deliver broadband services in the context of the migration to fibre networks in Australia," he added.
“After seeing how amaysim made its mark on the mobile services market we’re excited at the opportunity to become part of an industry-leading team as it takes the logical step into the growing nbn market and we take our shared vision to the next stage of growth."