Access Providers buys IT solutions provider, Activ

Stuart Corner
Monday, 30 October 2006 07:30

IT Industry - Deals

Access Providers (ASX: APV) is to acquire Sydney-based IT solutions provider Activ Australia for a mixture of cash and shares.
The move follows the sale last week of  Access Providers' SelecTV shares to WIN Corporation for $2.58 million. http://www.itwire.com.au/content/view/6606/127/

Activ founder and owner, Tim Watson, will receive 12 million Access Provider shares and an undisclosed amount in cash, giving him about 12 percent of the company's shares. He will also take on the role of head of strategy at access providers. According to Access Providers' CEO, Keith Ondarchie: "His prime role will be to develop the strategic direction for the group covering product direction, management direction, systems and network direction; but he will still be running the Activ business until we get the synergies right."

The acquisition marks Access Providers first significant foray into the IT solutions space, and gives it its first staff on the ground in Sydney. Activ provides a wide range of IT services to about 600 business customers with between them 25,000 end users. The company has been in operation for more than a decade. Access Providers presently has 50 employees and Activ 19.

Ondarchie said the company expected Activ to make a contribution of $400,000 to net profits, expected to be in excess of $1 million, for the current financial year. EBITDA is forecast to be in excess of $2.3 million on revenues of $18.5 million.

"Access Providers will be able to increase profit margins [for the Activ business] through the introduction of business grade wireless services to Activ customers, access to improved buying power and lower per customer service costs whilst increasing the quality of service to our customers at the same time," Ondarchie said

According to Ondarchie "Activ actually outsource all their engineering activities: their real focus is customer support and solutions design."

Access Providers presently uses BigAir's network in Sydney but the company expects to build its own wireless network in the future. It has been using 802.16 point to multipoint equipment from Proxim since 2001. "But we are looking at a whole  range of other things," Ondarchie said.

Access Providers had sufficient funds to complete the Activ acquisition, Ondarchie said. However, it is reviewing its funding structure and will put in place what it says will be "an appropriate mixture" of cash and debt. "We have very little debt at present," he said.