M2 buys Commander's SMB telecoms business for $19m

Stuart Corner
Tuesday, 02 June 2009 07:39

IT Industry - Strategy

M2 Telecommunications Group (ASX: MTU) is to pay $19m for all of the small and medium business (SMB) assets and associated intellectual property of telecoms and IT services company, Commander Communications. The deal is the latest in a string of significant acquisitions that have turned the ten year old company into a major player in the Australian telecoms market.

M2 said the deal would add in excess of $100 million per annum in customer revenues from fixed line, mobile and data services together with the widely recognised Commander brand.

M2 will acquire all SMB customer contracts of Commander and its related entities; the Commander brand/trademark; other Commander-owned brands/trademarks, including Australia Star, Call Australia, Newtel; all proprietary Commander operating systems, software, plant and equipment, but excluding network infrastructure).

M2 said it would take on a 'sizable number' of Commander employees at completion and intends to maintain the company's Adelaide based customer operations centre. "M2 also plans to work closely with the established nationwide Commander sales and service network, with a view to reinvigorating Commander's SMB product and service offerings," the company said in a statement.

M2 expects the acquisition to increase earnings per share (EPS) by more than 50 percent in the 2009/10 financial year and to lift M2 group revenues to more than $360 million.

M2 was established in 1999 and now claims to be Australia's largest network independent provider of fixed-line, mobile and data telecommunications services. It has in recent years made a string of substantial acquisitions. It acquired Southern Cross Telco, an established retail and small enterprise targeted telco, in October 2007, Commander Communications' wholesale network services company, Unitel Australia, in February 2008, and in April 2009, People Telecom, under a deal announced in December 2008.

M2 Wholesale was launched in mid 2006 following M2's appointment by Optus as it describes as its "exclusively endorsed aggregator/enabler of Optus mobile services." In May 2007 M2 bought Wholesale Communications Group Pty Ltd, claimed to be Australia's largest independent data wholesaling business,

M2 was named by Business Review Weekly as one of Australia's fastest growing companies in 2003, 2004, 2005, 2006 and 2008 and made it into the Deloitte Technology Fast 50 in 2004, 2005 and 2008.

Since Commander was placed into receivership, in August 2008 , receivers McGrathNicol have sold of various parts of the company. Most recently, in November 2008, McGrathNicol announced that it had sold Commander's telecommunications business to Commander Telecom Group; a company "established by a consortium of local and internationally experienced telco investors who specialise in the information, communications and new media sectors." That deal would have guaranteed the jobs of 400 Commander employees but it fell through in January 2009 because CTG was unable to complete the contract.