S P Telemedia buys Comindico for peanuts

Stan Beer
Monday, 01 November 2004 16:20

IT Industry - Development

Regional telco service provider S P Telemedia (ASX:SOT) is to acquire the assets and business of Comindico from the receivers, McGrath Nicol, for what it describes as a fraction of their original value. Comindico, which spent $400 million on establishing its network over four years, went into voluntary administration last month, after running out of cash. Peter Walker and Steve Sherman of Ferrier Hodgson, appointed as voluntary administrators of the group of companies, said at the time that Comindico could be sold off as a going concern.

However, Cisco, which provided $175 million in vendor financing for Comindico during the lifetime of the company, stepped in and appointed McGrath Nicol as receivers to effect a sale.

In a statement to the ASX SOT, which in 2004 reported net earnings of $9.659 million and a healthy cash balance of $85.8 million at the end of the financial year, said it had acquired one of Australia's first and largest fully convergent IP based networks, capable of carrying voice data and video simultaneously, at a fraction of its original construction cost. What that fraction is, nobody is saying at this stage.

According to SOT, the Comindico network will complement and enhance the existing SPT IP network and position the company for further growth. "The acquisition will enable SPT to further expand its current extensive regional IP broadband network and significantly increase the capital city network and presence of SPT. The acquisition will also enable SPT to add a number of new products to the current SPT product suite, mainly in the voice, dial-up internet and broadband markets and, importantly, this will be on owned infrastructure," the statement said.

Whatever SOT paid for Comindico, the market appears to have been satisfied with the transaction. SOT shares closed up 4c in brisk trading to finish on $1.54.