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Tuesday, 23 February 2010 10:39

Amcom moves into enterprise telephony, buys IP Systems

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Amcom Telecommunications (ASX: AMM) has acquired privately held IP Systems Pty Ltd, a provider of converged voice, video and data services to the enterprise market, for $6.5m ($5.3m in cash). The moves puts it in competition with iiNet in which it holds a 22 percent stake.

Amcom said the acquisition would expand its product range into enterprise voice solutions and increase its addressable market. Amcom's CEO Clive Stein said: "This gives us the potential to significantly increase Amcom's share of our customers' spend on telecommunications services.

"The acquisition also provides opportunities for Amcom to extend its market footprint, with an Amcom office now in most major capital cities. This means Amcom can better serve the needs of national customers and grow our business.

The move also puts Amcom in competition with iiNet in which it holds a 22 percent share. IP Systems was the first organisation in Australia to offer hosted IP telephony services of the BroadSoft platform, now used by Telstra, TelstraClear, Internode and by iiNet.

While iiNet's initial focus was the residential market it is moving increasingly into the small business market. At its annual results announcement this week iiNet said that revenues from its small business unit had grown 24 percent over the year to 31 December 2009, to $15.8m (more than IP Systems total revenue of around $12m). At 31 December iiNet had 130,000 VoIP services in operation, but gave no breakdown between residential and business.

Just under two years ago iiNet launched a new portal for business customers and Andy McIntyre iiNet's general manager business, told iTWire that the move represented the culmination of his four-year long ambition to take iiNet into the business market.

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According to Stein, "IP Systems has 10 years' experience in deploying reliable market leading voice and communications technology, and its products are ideally suited to Amcom's existing customer base. We are very pleased that as a result of this acquisition we will be able to provide our existing customers with a 'best of breed' voice and communication solution that enhances our already strong customer relationships."

"IPS will add approximately $12m revenue to our strongly growing business. Very importantly this transaction has been structured to be EPS accretive for our shareholders from the first full year of ownership," Stein said.

Amcom will pay an initial $6.5m comprising $5.3m in cash and 4.1m shares in Amcom at 30c. It will later pay between $3m and $14m in shares subject to IP Systems meeting agreed profitability levels between 1 July 2009 and June 2012.

According to its web site, IP Systems started life in 1994 as one of Australia's first application service providers (ASPs). "Early on we saw the potential for unified communications as a driver for business efficiency, particularly when integrated into an inter-office phone network. With this vision in mind we became the first provider in the country to deliver a fully managed business IP phone system over a private IP network (VPN)."

The company claim to operate a Cisco-powered network built on a fibre-optic backbone that "has been made to deliver converged voice, video and data solutions to major centres in Australia and New Zealand."

iTWire has been reliably informed that IP Systems is operating the BroadSoft platform underpinning Engin's recently launched hosted IP PBX offering.

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