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What lies ahead for Spirit Telecom

What lies ahead for Spirit Telecom

Reveals strategy following the announcement of its fifth acquisition in seven years

Geoff Neate (Spirit Telecom)

Geoff Neate (Spirit Telecom)

Credit: Spirit Telecom

Launched in 2005 in Melbourne, Spirit Telecom has grown both organically and through acquisitions throughout the years, becoming a publicly-listed company in 2016 and closing the last financial year – FY18 – with $570,605 in profit, or 22 per cent increase, and $16.3 million in revenue.

With approximately 70 staff, Spirit has so far acquired four businesses including Voxcom in 2012, My Telecom in 2015 and Phone Names and World Without Wires in 2017.

Now, following the announcement of the company's fifth acquisition, LinkOne, Spirit Telecom co-founder and managing director Geoff Neate told ARN the telecommunications market in Australia is very large and Spirit has no problems enjoying a portion of it.

"We are not trying to be a large player we are just trying to be a fast-growing one," he said. "We are looking at the opportunity to be the number one provider for small business and above along the eastern seaboard of Australia.

In February, Spirit Telecom flagged plans to focus on acquisitions in the second half of the 2019 financial year, saying it had a shortlist of three companies with complementary wireless network assets that are moving through the due diligence process.

"In the last financial year, we had good growth brought about by acquisitions but also by organic growth. With that confidence, we started to put our foot down and increase our OPEX spend in marketing and we built a marketing team and a sales team. But to go to the next level we would have to invest," Neate told ARN.

"We invested in our network, our systems and our people and what we saw was that our top line wasn't growing as quickly as we'd like.

"We had a lot of legacy PSDN and ADSL running off and telco is a scale game, so as we were getting leads in, we were seeing a lot coming out of Sydney and Brisbane and we always had ambitions to go to the eastern seaboard. So it came down to "Do we buy? Or do we build?" and there was an opportunity there with LinkOne and we decided acquisition was the way to go," he explained.

Neate said that the company said no to a number of acquisitions and that LinkOne was attractive because of the type of technology that they use, the geographic market they are in – Brisbane and Sydney –, smart team heading it up and as it was as a very good fit to come into Spirit.

"There are other ones we are looking at it but this one was the one we were focused on more than others," he said.

Spirit Telecom is likely to make more acquisition announcements in "the not too distant future", Neate added.

Recently, Spirit received an acquisition offer from Adelaide-based broadband specialist Uniti Wireless. The offer was properly evaluated by the board as every offer would be, Neate explained to ARN.

"And we thought it not in the best interest of our shareholders to go forward. And that was the unanimous decision."

Neate also reiterated that Spirit already uses technical components of what will become the 5G standard. He refers to the beamforming technology, an antenna that transmits the signal in an approximately circular pattern and usually used by radio broadcasters or low-end Wi-Fi routers.

"We don’t see 5G being a substitution from a mobile perspective and because we will always be tuned for high speeds into our network, we expect that the market will be big enough that Spirit will be able enjoy an ongoing growth of Spirit using the same technology we are currently using."


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