Speedcast (ASX:SDA) is aiming to ramp up its government credentials after striking an agreement to acquire communications player, UltiSat, for a purchase consideration of up to US$100 million.
The Australian-listed satellite telecommunications service provider expects its purchase of the US-headquartered remote communications company to boost its government business within the market in which UltiSat plays, effectively building its success in the public sector closer to home.
In a statement lodged with the Australian Securities Exchange (ASX), Speecast said that UltiSat services governments, in particular, the US Government, in addition to international government organisations (IGOs) and non-governmental organisations (NGOs).
“The acquisition strengthens Speedcast’s position in the government and NGO sectors, complementing Speedcast’s government activities in Australia, Europe and Latin America,” the company said.
Most recently, on 26 June, the company renewed its contract with Save the Children International, an international NGO to provide connectivity to a network of more than 40 sites in Africa.
On 7 July, Geoscience Australia, Australia’s public sector geoscience organisation, renewed its contract with the company for life-saving connectivity applications.
Speedcast CEO, Pierre-Jean Beylier, said the acquisition of UltiSat extends Speedcast’s position in serving government and NGO Customers.
“UltiSat has built a really strong reputation providing remote communications and professional services to key customers, such as the US Government and IGOs,” Beylier said.
“Speedcast’s scale, global network and support services capabilities will enable the combined group to provide expanded services and coverage for UltiSat’s customers around the world. Speedcast will be able to leverage UltiSat’s solutions and expertise to serve other governments globally, with which Speedcast has existing relationships.”
Speedcast, which counts Cisco, Fortinet and Singtel among its roster of technology partners, has also created a government division in tandem with the new acquisition, with the new business segment focused on delivering more into the public sector space.
UltiSat CEO, Mohammed G. Abutaleb, will lead the newly formed division, with the aim of providing communication solutions and professional services to Speedcast’s and UltiSat’s existing and new government IGO customers.
He will also be in charge of driving new growth in the $5 billion market for government and military satellite communications.
“Speedcast’s scale and global capabilities will enable us to expand the portfolio of services we can offer to our customers and to pursue new opportunities,” he mentioned.
“This is an exciting development for our employees and our customers and I look forward to taking our combined government and IGO business to new heights over the years to come.”
UltiSat is not Speedcast’s first purchase. In December 2012, the company bought over Adelaide-based Australian Satellite Communications (ASC). In July 2015, it acquired the assets of the teleport and satellite services business of NewSat (ASX:NWT) from its receivers.
The purchase of UltiSat payable over two years and is subject to the ongoing financial performance of the company and customary closing conditions. Speedcast expects the transaction to be complete by the fourth quarter of this year.
At the time of writing, Speedcast’s shares were trading at $3.77.