Spirit Technology Solutions is set to sell off its consumer residential internet business to fibre broadband services provider DGtek for $5.1 million in order to double down on the business market.
The agreement will see DGtek acquire the telco-turned-IT services provider’s consumer business, including its customer base and relevant infrastructure assets, which currently makes up less than 2 per cent of Spirit’s revenue.
By divesting its consumer assets, Spirit claims it will see a value profit of $2.5 million.
Meanwhile, DGtek will expand its footprint to 35,000 ready-to-connect premises and is expected to accelerate the rollout of its full fibre network across Australia.
This is DGtek's latest play to expand its network, following a successful series A funding round of over $7 million to fuel its expansion efforts in August as well as the acquisition of FG Telecom in June.
“The sale of Spirit’s non-core consumer business will enable us to focus on our strategy in the business market segment given the structural IT&T changes occurring with the way people work,” said Spirit managing director Sol Lukatsky.
“Following a rapid period of growth, we are now a large, integrated IT and telecommunications provider for businesses across Australia and we see an opportunity to move the revenue mix towards mid-level and larger corporates. These markets are more profitable and attract larger and longer contract sizes.
“DGtek is an experienced private full-fibre optic network provider who shares our view on the importance of affordable and ultra-fast internet,” he added.
Additionally, Spirit is also considering selling off its fixed wireless towers and is looking over numerous non-binding proposals, but has not yet come to a decision.
The divestment of Spirit’s consumer assets to focus on the business market follows moves made by the IT services provider to bolster up the segment.
In March, it acquired telco Nexgen to double its business-to-business (B2B) customer base to over 10,500, picking up 5,000 B2B clients, 100 salespeople and an additional $36 million to its revenue banks.
Then in its unaudited financial results for the 2021 financial year in July, Lukatsky said Spirit saw “strong demand from the SMB [small- to medium-sized business] segment for our voice and data products with record sales results”.