Sydney-headquartered MNF Group has entered into an asset sale agreement that will see the publicly-listed company sell its fixed line residential broadband customer base to Southern Phone.
Based in Moruya, New South Wales, Southern Phone is a telecommunications provider established in 2002 and operates as an unlisted public company employing more than 150 people. The telco provides fixed line, mobile and internet communications services in regional Australia.
The value of the transaction has not been disclosed, but MNF told shareholders the sale is not material and is not expected to make a material difference to the full year guidance.
However, MNF does expect savings in operational costs post customer migration.
The decision was made following a review of MNF's legacy residential broadband business, which determined that the customer base was a non-core business.
The acquisition is expected to be completed at the end of March 2019 and MNF said both companies have worked together for 18 months, jointly leveraging each other's extensive software capabilities through API integration for number porting and other voice capabilities.
Following the acquisition, Southern Phone plans to migrate MNF’s fixed line residential broadband customer base onto its platform by the end of May 2019.
MNF guaranteed there would be no disruption of the services and MNF will notify affected customers.
Residential MyNetFone VoIP customer base and its residential PennyTel mobile customer base will remain with MNF, as well as the brands and customers acquired from Inabox in December. Those are Telcoinabox, iVox, Neural Networks, Mobile Service Solutions and Symmetry Networks.
In early October, MNF Group entered into an agreement to acquire Inabox's indirect business, under that first proposed deal MNF Group would pay between $30.3 - $33.5 million for the business units, with the wholesale business currently responsible for 500 customers.
However, a month later, Inabox received another bid from SB&G Group but only a few days later MNF improved its offer increasing the purchase price to $34.5 million on a debt-free basis, which could in turn represent an increase in the distribution to shareholders. This deal was then approved by shareholders in December.
MNF Group has seen its net profit after tax (NPAT) fall by nearly 50 per cent to $3.1 million for the half year ending 31 December. The publicly-listed company pointed to a decrease in previously stated global wholesale margins of $4 million due to "contracts unwinds" in usage based volumes.
The global wholesale business decline also hit MNF’s revenue, which fell by 16 per cent to $98.1 million from the previous corresponding period. Earnings before interest, tax, depreciation and amortisation (EBITDA) was $9.8 million.
However, in an update to shareholders, the company said it remained confident of achieving a full year NPAT of between $11 million and $12 million.