Superloop (ASX: SLC) is set to pay $10 million for South Australian fixed wireless internet services provider, NuSkope, as it works to expand its reach in the Adelaide market.
The publicly-listed fibre network infrastructure provider told shareholders on 11 September that it had entered into an agreement to acquire NuSkope and its associated entities, RA-WIFI Pty Ltd and RA-ADSL Pty Ltd.
NuSkope has made a name for itself delivering high-speed internet access to homes, schools and businesses in South Australia. The company was established in 2007 as a specialist wireless network provider offering broadband to areas of metropolitan Adelaide which were typically in broadband black spots.
The fixed wireless internet provider generated customer revenue of over $7.1 million for the 2017 financial year, up from $4.1 million for the 2016 financial year, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of over $2.4 million.
For Superloop CEO, Bevan Slattery, the acquisition of NuSkope is set to hand Superloop a portfolio of strategic assets, including the ownership of existing wireless network infrastructure, a sophisticated network coverage service qualification tool and valuable customer relationship management (CRM) database.
Among the reasons behind the acquisition, according to Superloop, is the expectation that the move will accelerate the company’s ability to expand its fixed wireless coverage in Adelaide and the surrounding areas, a factor which "neatly complements" the company's existing BigAir wireless network footprint.
It is also anticipated that NuSkope will give Superloop the ability for further opportunities to deploy high bandwidth, low operating cost mmWave and multi-point access technology, and allow the company to offer a "reliable and high-quality experience" for customers and wholesale partners.
NuSkope’s existing team of employees is also set to imbue Superloop with substantial retail fixed wireless experience and provide the platform and expertise to expand interstate and into other geographic areas.
“We are very excited to be working with NuSkope and expanding our reach in the strategically important Adelaide market,” Slattery told shareholders. “This acquisition will drive Superloop’s capability to address the increasing appetite for wireless connectivity solutions and compliment the BigAir wireless infrastructure acquired in late 2016.
“The NuSkope team has built a leading position in the South Australian market and has developed impressive systems and processes which will enhance our ability to service our wholesale customers and strengthen our ability to compete and meet growing customer demand across the region and in new areas,” he said.
The deal comes as Superloop looks to further invest in expanding its South Australian network and team into the future.
“The founders Michael, Rabih and Adam are some of the most innovative and efficient operators in this space and we are all committed to keep that going. I look forward to working with them and expanding their service offering,” Slattery said.
Consideration for the strategic acquisition includes $7.0 million in cash plus $3.0 million in Superloop shares at an issue price of $2.457, being the volume weighted average price for the 30 trading days to 6 September 2017.