Spirit Telecom (ASX:ST1) has entered into an agreement to acquire Queensland-based World Without Wires, or Wires Broadband, for $4.6 million.
Wires Broadband owns 12,000 square kilometres of superfast fixed wireless network, spanning from Noosa to Byron Bay. According to Spirit Telecom, Wires has a similar business model to Spirit’s Spirit Air.
The acquisition will add value to telecommunications provider Spirit Telecom through geographically expansion of the Spirit network, opportunity for growth within the Wires network footprint, high growth, high margin business, ability to bundle services to existing customers and an established wholesale channel.
Wires Broadband will bring more than 2,200 business and residential customers to Spirit. The company revenue for the past financial year was $2.6 million.
Dainen Keogh, Wires chief executive officer, will become Spirit chief infrastructure officer, responsible for network planning and deployment.
“We have been working with Spirit, in a supplier relationship for some time now and we are confident that our two teams will come together and work as a cohesive unit,” Keogh said. “We have chosen to take 32 per cent as scrip, given we understand the opportunity to be part of a larger organisation.”
The acquisition is subject to customary conditions precedent which is expected to be met over the next 10 days.
The business has a normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately $1 million for the previous 12 months. According to Spirit, there are known network synergies that will increase this EBITDA to $1.1million.
The acquisition will be funded via a $6 million Bank of Melbourne debt facility ($3.8 million replacing the Bankwest debt) and a capital raise from institutional and sophisticated investors of $1.5 million.
“This is an exciting acquisition that has been over 12 months in the making and brings a growing business, managed by a smart team, into Spirit’s stable,” Spirit managing director, Geoff Neate, said.
“This will expand Spirit’s footprint significantly and generate a stronger platform of growth. Wires CEO, Dainen Keogh, will join the Spirit executive team and will bring another level of thinking and expertise to our team.”
Spirit listed with the ASX in June 2016 following a successful capital raise.
The company has previously acquired business telecommunications and phone systems provider Voxcom in 2012, My Telecom in 2015 and Phone Name Marketing in 2016.