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Spirit makes triple acquisition of Beachhead Group, Altitude IT and Reliance IT

Plans to disrupt major IT and telco providers in the market
Sol Lukatsky (Spirit Telecom)

Sol Lukatsky (Spirit Telecom)

Spirit Telecom's plans to disrupt major IT and telco providers in the market are coming to fruition after making a triple acquisition, snapping up managed IT service providers Beachhead Group, Altitude IT and central-NSW based Reliance IT. 

The triple acquisition will see the companies “add critical mass” to Spirit’s new wholesale division and will be rebranded to ‘Spirit Solutions Partners.’ 

The three acquisitions will arm Spirit with geographical expansion across Sydney metro and central NSW, bringing strong sales, IP, products, IT engineering skills, and the ability to generate $12 million in combined revenue.

The three companies will be highly complementary to Spirit’s IT services business, offering managed services, voice, cyber security and cloud-based solutions, according to Spirit. 

This will be further complemented by 21 new Spirit Solutions Partners and resellers signed up across NSW and Queensland in July to sell Spirit products via the wholesale channel.

It comes as Spirit successfully raises $18.2 million in a strongly supported placement, which is going towards these activities. At the same time, a share purchase plan has been issued to raise up to $5 million. In addition, CBA has increased Spirit’s debt facility by $5 million. 

The acquisitions are subject to certain conditions, expected to be completed by 1 September, and will expand Spirit's market reach, which will now encompass industrial, corporate, education, health and mining sectors. 

Of the acquisition targets, northern Sydney's Beachhead Group was founded in 2004, specialising in cloud and infrastructure deployment to business and private schools. 

Sydney-based Altitude IT offers cloud, VoIP and IT managed services with a diverse base of recurring revenue across the industrial sector.

Dubbo-based Reliance IT serves up cloud managed and telco services for regional customers. 

During the past year, Spirit has completed seven acquisitions, including VPDNeptune and Trident GroupCloud BTPhoenix AustecArinda IT and Building Connect

“These acquisitions are consistent with our strategy to bring in right-fit, right price, high margin IT and telco services businesses,” Spirit managing director Sol Lukatsky said. “Additionally these transactions will give us much deeper presence in Sydney and Central NSW.”

Lukatsky said the company will push aggressively with the rollout of its wholesale network, Spirit Solutions Partners. 

“We have recently signed 21 new partners, and now with these transactions and new funding lines, our sales network expands at pace nationally,” he said. “An expanded dealer network combined with our digital sales platform, Spirit X, will be a powerful engine to disrupt the major telco and IT companies across Australia.”

Investing in its aggressive acquisition and growth strategy saw Spirit’s net profit absorb a $1.5 million loss for the 2020 financial year, ending June 30.

Revenue increased 100 per cent to $34.9 million as the publicly listed company foresees a strong pipeline of acquisitions in negotiation and due diligence stages.

During FY20 Spirit undertook a strategic decision to invest in its Spirit X Digital platform and advertising spots to grow leads, sales channel and brand nationally. 

As a result of this move, it has witnessed a strong start to FY21, already booking $2.3 million (total contract value) of new sales, up from $900,000 in July last year. The acquisition of VPD Group last month has already contributed $1.3 million in total contract value. 

The telco plans to have more than 300 partners as part of its wholesale dealer network by the end of the year.

In the past five months, Spirit Telecom has grown its market cap from $43 million to $170 million.

In a presentation to shareholders, the telco believes combined IT services and business telco markets, represented a $49 billion high growth opportunity, particularly focusing on the gap in the modern telco space to be a 'one stop shop' for businesses.