Telecommunications provider Hubify, formerly known as United Networks, has acquired Net Hoster's telco customer database for $800,000 in cash in order to expand into Queensland.
Expected to take place on 26 February, the database acquisition involves 203 small to medium business customers from the Queensland-based telco and service provider, with annual recurring revenue of $4,900 per customer to total approximately $1 million.
Additionally, Hubify will also gain offshore resources that will be expanded to reduce its overall back office costs as it continues to grow, according to a statement sent to the Australian Securities Exchange (ASX), although it will not acquire Net Hoster's overseas support team.
The deal is expected to have an incremental earnings before interest, tax, depreciation and amortisation (EBITDA) contribution of $400,000, made up of an initial forecast of $250,000 and an immediate $150,000 in synergies from improved wholesale pricing with Hubify’s existing suppliers.
While Hubify already has customers in Queensland, the acquisition means it will have a physical presence in the state, along with NSW, Victoria, South Australia and Western Australia.
Net Hoster continues to provide its services for its customers, and will do so after the settlement of the proposed transaction, in addition to also offering managed services, surveillance, printing, Wi-Fi, SEO and web services.
Hubify CEO Victor Tsaccounis said the acquisition was part of the telco’s “dual-pronged growth strategy”.
“As we continue to build out our growth strategy, the purchase of the Net Hoster database represents the addition of a solid customer base built over time with good retention rates,” he said.
“We will take the same approach as we have with prior acquisitions to implement our cross-sell strategy using our experienced sales staff to service these new Hubify customers and generate additional revenue streams.
“While we are conscious of maintaining a disciplined approach to acquisitions and integration processes, with a strong underlying organic business and a robust balance sheet ($6 million cash post acquisition), we remain committed to pursuing further accretive acquisitions in the near term, and look forward to updating the market as our pipeline materialises.”
This acquisition of Net Hoster's telco customers comes days after Hubify released its results for the half-year ending 31 December 2020, which saw profit rise by 23.6 per cent year-over-year, to $9 million, and its EBITDA increase by 78.3 per cent, to $1.2 million.
Meanwhile its statutory post-tax profit was down 67.5 per cent, to $651,564, due to the recognition of a one-off deferred tax credit of $1.8 million at the end of December in 2019.
The acquisition also comes months after Hubify, then United Networks, acquired Red Telecom for $500,000 in October 2020.
Article updated at 10:39am 18 February to reflect that Hubify will take over Net Hoster's overseas support team connected to the onboarding and servicing of the acquired customers, and that Net Hoster will continue to sell telecommunications services post-database acquisition.
Article updated at 12:30pm 19 February to clarify that Hubify has not acquired Net Hoster's telco customers but its telco customer database, as well as the facts that Hubify will not be acquiring Net Hoster's overseas support team but will be gaining offshore resources, and that Net Hoster continues to provide its services for its customers, and will do so after the settlement of the proposed transaction, as well as to mention that the acquisition is expected to take place on 26 February.