Melbourne-based carrier 5G Networks (5GN) has acquired Melbourne Data Centre (MDC) in a $5.7 million deal that will see the business strengthen its infrastructure expansion.
The acquisition is composed of $1 million in cash and $1.75 million in issued shares, and will be complemented with $2.95 million in cash paid over the next three years.
In the first year the sellers will receive a total of $550,000 paid in quarterly payments, with the second-year payment totalling $1.2 million followed by a final $1.1 million payment.
As part of the deal, 5GN will provide data centre services over the next three years to the sellers, a service valued at $1.6 million.
Currently, 5GN spends $3.8 million per year in data centre services from third party providers. The acquisition will mean significant cost savings for the business as well as bring revenue growth and operational synergies, with an expected $600,000 of annualised synergies within the first three months.
With only 40 per cent of MDC's capacity in use there is space for 5GN to benefit from new and existing customers and increase revenue.
MDC was established in 2011 and is located in Melbourne's CBD and was designed as a Tier 4 facility. It houses 330 racks and has Empired as one of its first customers.
"5GN can now offer direct and managed access from our own data centre all the way through to cloud and managed network services," explained 5GN managing director Joe Demase.
"Through this growing infrastructure footprint we can manage the digital experience so that our services are easy to use and seamless for customers, all locally managed with a single point of contact through our national 24/7 service centres. We will now explore wholesaling the growing number of infrastructure products we can offer," he added.
5GN connects a "significant proportion" of its fibre and wireless network in MDC.
In March, 5GN launched its managed data network, called MPLS, which runs across Australian capital cities. As such, the carrier was able to extend its fibre and wireless network and swap third party services with its own network.
The data network offers speeds of up to 10Gb to customers and offers secure and private access to existing cloud, hosting and managed services.
In March 2018, 5G Networks acquired fellow Australian telco provider Asia Pacific Telecommunications Group (APTel) for $6 million.