Vonex offers up $31M for a chunk of MNF Group’s direct business
- 07 June, 2021 11:38
Rene Sugo, MNF Group CEO
Telecommunications provider Vonex could gain more than 100 new Australian telco channel partners and over 5,000 new business customers if its $31 million deal to acquire part of the direct business of fellow telco provider MNF Group reaches fruition.
The companies, both listed on the Australian Securities Exchange (ASX), told their respective shareholders on 7 June that they had signed a conditional term sheet for the sale of part of MNF Group’s direct business to Vonex for the proposed price of $31 million.
However, the term sheet is non-binding, other than customary matters including exclusivity, the companies said.
MNF Group’s direct business sells cloud phone, internet and mobile services directly to small- and medium-sized enterprises (SMEs) and residential customers in Australia. It also claims a dedicated audio and video conferencing business. The business delivered a revenue of $15.6 million in 2020.
It is hoped that the proposed acquisition, if it reaches completion, will materially expand Vonex’s footprint of SME and residential customers across Australia, seeing the company migrate approximately 5,250 new business customers to its platform.
The proposed deal would also strengthen Vonex’s channel partner network, bringing across more than 100 channel partners through which the company could reach new customers.
MNF Group said the sale was in line with its strategy to simplify its business, grow recurring revenues and focus on growing the MNF wholesale business, Symbio.
The direct businesses that form the sale agreement include those that provide cloud phone, mobile and internet services directly to small business and residential customers in Australia.
While the customers set to be migrated across to Vonex as a result of a successful sale are predominantly served by MNF Group’s legacy MyNetFone brand, the brand itself is not part of the sale and MNF will retain its enterprise and government clients.
Importantly, for MNF Group, at least, the term sheet includes a requirement for the parties to enter into an exclusive Symbio wholesale supply agreement for phone numbers and minutes with a five-year contract term. The wholesale supply agreement means MNF will retains over $3 million per annum in existing revenue for the domestic wholesale business.
Assuming all conditions are satisfied, MNF Group expects that an asset sale agreement will be executed in July 2021.
“The divestment of these direct businesses is in line with our strategy to simplify MNF’s business and drive growth in our CPaaS [communication platform-as-a-service] and UCaaS [unified communication-as-a-service] voice services, which are in high demand,” MNF Group CEO Rene Sugo said. “Importantly, funds from the sale will be reinvested into our growing wholesale business and our expansion offshore.”
In February, MNF Group entered into a binding agreement to sell its SIM-only mobile provider PennyTel over to wholesale customer Macarthur Telecom.
The decision to divest the business and brand targeting those over 55 came following a strategic review of its direct businesses.
In December last year, Vonex acquired fellow telecommunications services provider Nextel for $1.5 million, giving it access to its infrastructure and telephony cabling business.