Home Industry Listed Tech MyNetFone on the acquisition trail, buys Connexus

Listed Australian telecommunications provider, MyNetFone (ASX:MNF), is paying $4.75 million to acquire Melbourne-based ISP, Connexus, in a deal which the company says will allow it to become a one-stop comms shop for Australian SMEs.

MyNetFone has also flagged its intentions to make further acquisitions, targetting companies with the potential to build its earnings.

In its statement to the ASX, MyNetFone said the $4.7million would be payable in cash in two instalments to be completed by the end of December this year, with the acquisition of Connexus expected to contribute gross revenue of $5.2 million per annum to the group, and add approximately $1.6 million to the company’s pre-tax profit over the next 12 months.

Connexus specialises in delivering high quality data communications to small and medium enterprise (SME) customers and according to MyNetFone CEO, Rene Sugo, the acquisition provides the company with a significant product portfolio in the managed data space to offer to the SME market.

“In addition to our existing products, MyNetFone will now be able to offer our customers a full suite of hosted services, such as email security, web hosting and internet filtering. Conversely, we gain the opportunity to offer Connexus¹ customers our highly successful suite of telephony products, such as Virtual PBX, Virtual Fax and hosted inbound call services ¬ all hosted on the vast MyNetFone cloud.”

Sugo said the acquisition of Connexus would provide enormous benefits to MyNetFone.

“It is valued at a low pre-synergy multiple of approximately 2.9 times EBITDA, and has a strong and loyal customer base in the SME sector. Additionally, it offers valuable synergy potential to MNF in network consolidation, cost sharing and product cross-selling.

“The Connexus customer base consists of approximately 1000 small to medium business customers and about 600 residential DSL customers. At the moment, these customers are only purchasing data products, so we believe there is a real opportunity to up-sell them to MyNetFone¹s extensive array of voice products, thereby increasing revenue and profit margin.”

MyNetFone’s statement to the ASX says the acquisition is expected to be EPS accretive in the current year (FY2013), and the company intends to maintain its conservative capital management practice and the regular payment of dividends.

This acquisition of Connexus is being funded, in part, by a $3 million share placement to institutional and sophisticated investors, by issuing 4,167,000 shares at 72 cent, with the remaining $1.75 million funded from free cash flow.

Sugo said MyNetFone’s $3million capital raising this week was significantly over subscribed, and in the interests of helping to fill that over-demand and providing further liquidity to MyNetFone¹s stock, an additional 2.5 million MyNetFone shares were contributed to the offering by Michael Boorne, a director of the company.

He said the Board was extremely positive about the future growth prospects for the company, which would continue to look for acquisition opportunities that bolstered earnings.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

 

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