Over the Wire swoops on Telarus in expansion push

Over the Wire swoops on Telarus in expansion push

Telco enters $7.6 million deal to snatch up Melbourne-based managed service provider

Telecommunications, cloud, and IT solutions company, Over the Wire (ASX:OTW), has agreed to pay $7.6 million for Melbourne-based managed service provider, Telarus, as part of its push into the Victorian market.

Over the Wire told shareholders on 8 December that had entered into an agreement to acquire all of the shares in Telarus, with the completion of the deal expected to take place on 16 January 2017. But the completion of the agreement remains subject to a number of conditions.

Telarus was established in 2002, and delivers enterprise telecommunications solutions to Australian and New Zealand small to medium-sized businesses (SMBs) and larger enterprise customers. It claims 25 employees and more than 300 business customers.

The Melbourne-based company has a portfolio of offerings, including data networks, managed security, private cloud services, and voice services. Its technology partners include Telstra Wholesale, Vocus, BigAir, NextDC, Megaport, VMware, IBM, and Cisco, among others.

It claims Pacnet Australia co-founder and former Communications Alliance director, Dennis Muscat, as its chief executive officer, and Communique Systems founding director, Graeme Smith, as its founder and chairman.

“Telarus will accelerate Over the Wire’s geographic expansion into Victoria,” the publicly-listed company told shareholders in a statement.

According to Over the Wire, Telarus recorded revenues of $11.6 million during the financial year ending 2016, $1.5 million in earnings before tax (EBITDA), and has been experiencing high levels of customer retention.

The terms of the deal sees Over the Wire acquire Telarus for a cash consideration of $7.6 million, to funded out of its existing cash reserves and a partial debt drawdown.

Over the Wire said that Telarus has a high quality customer-base and offers cross-sell and interstate expansion opportunities, with the integration expected to deliver “significant synergies”.

“We are very excited to welcome Telarus to the Over the Wire Group,” the company’s managing director, Michael Omeros said. “Telarus is a high-quality provider of managed networks, managed security, and private cloud, led by a well-respected industry veteran, Dennis Muscat.

“Telarus expedites our geographic expansion plans into Victoria, as well as introducing some complementary new offerings in managed security and mobile data, which will be of great benefit to our existing customers,” he said.

At the time of writing, Over the Wire's share price stood at $2.45.

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Tags telarusOver the WireMichael OmerosGraeme SmithDennis Muscat


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