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Tuesday, 30 August 2011 13:20

MyNetFone to buy related company Symbio

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VoIP and Internet service provider, MyNetFone (ASX: MNF) is to acquire its closely related network services provider the Symbio group of companies.

It expects the move to contribute revenues of $24m and $26m and NPAT of $0.96m and $2.2m for the 2012 and 2013 financial years respectively taking MyNetFone's forecast revenues to $40m and $48m, and NPAT to $2.09m and $4m respectively in the same years (In FY10 MyNetFone reported NPAT of $1.97m on revenues of $12.1m).

MyNetFone said: "This acquisition will strengthen MyNetFone's continued product innovation, deliver significant cost savings in service delivery, and provide a solid path to international growth."

The purchase price is based on four times net earnings, with an initial $2m payment and the balance payable according to forecast achievement in two tranches, at the end of 2012 and 2013 financial years.

Symbio provides call termination, call origination, number porting and white label hosted VoIP solutions to MyNetFone and to other Australian and international customers. The group comprises two main entities: Symbio Networks and Symbio Wholesale.

Announcing the deal on its web site, Symbio said: "Symbio will continue to operate as an independent wholesale carrier servicing the Australian and international VoIP market. There will be no change to structure or operations and Symbio Wholesale will operate as a wholly owned subsidiary of MNF. There will be no effect on Symbio's customers, who will continue to receive the high standard of service they are used to, together with the best value prices in the industry."

Symbio was founded in 2002 by two of the founders - and currently directors and the largest shareholders - of MyNetFone, Andy Fung and Rene Sugo both of whom are directors of Symbio Networks and Symbio Wholesale.

Since the formation of MyNetFone in 2006, Symbio has provided many of the network services and facilities that underpin MyNetFone's operations. As MyNetFone noted in its FY2010 annual report "The Group is dependant upon the supply of services by Symbio pursuant to its contracts with Symbio Networks Pty Ltd and Symbio Wholesale Pty Ltd'¦If, notwithstanding its contractual obligations, Symbio were to fail to supply the group, there is no guarantee that the Group could either obtain these services from another party or provide them itself in the short term." Symbio's network equipment is also housed in premises sublet from MyNetFone.

In FY10 MyNetFone paid Symbio over $6m out of total expenses for network services, almost 50 percent of total revenues.

According to MyNetFone, its independent directors - who negotiated the deal on behalf of the company "are of the view that this transaction represents enormous financial and strategic benefits to MyNetFone." The transaction is subject to shareholder approval at the upcoming MyNetFone AGM. An independent valuation report, together with other documentation will be provided to shareholders ahead of the AGM.

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