Telecommunications provider Vonex is set to gain more than 5,000 new customers through a deal with Sydney-headquartered MNF Group.
Telecommunications provider Vonex is set to gain more than 5,000 new customers through a deal with Sydney-headquartered MNF Group.
Vonex, formerly based in Perth, announced on Monday it had signed a non-binding term sheet to purchase part of MNF Group’s direct business for $31 million in cash.
Vonex said it would pay $20 million upon completion and the remaining sum in monthly installments.
MNF’s direct business sells cloud phone, internet, and mobile services directly to small to medium enterprises (SMEs) and residential customers across Australia.
The direct business reported revenue of $15.6 million last year and underlying earnings of $5 million.
Vonex said the proposed acquisition would materially expand the company’s footprint of SME and residential customers across Australia, with 5,250 new business customers expected.
The deal would also introduce a number of cross-sell opportunities for complementary products, Vonex said.
The ASX-listed companies plan on signing the asset sale agreement next month, with the deal expected to complete on July 31.
There will be no board changes as a result.
Managing director Matthew Fahey welcomed MNF and its customers to the Vonex group.
"As the new 'work from home' paradigm has become part of life for more Australians, we have increasingly focused on providing Australian SMEs with telco services that are reliable, affordable, flexible and scalable," Mr Fahey said.
"Migrating and integrating the Direct Business with our own will bring us a meaningful national footprint and help us to gain the scale through which we can continue to deliver strong value to customers and investors."
MNF Group chief executive Rene Sugo said the sale was in line with the company's strategy to simplify the business and drive growth.
"Importantly, funds from the sale will be reinvested into our growing wholesale business and our expansion offshore," Mr Sugo said.
"Vonex has been a long-term partner to MNF Group and we have been very impressed with their technical capability and detailed migration plan.
"This was a significant factor in our decision to select Vonex to acquire the Direct Business.”
Vonex, now headquartered in Melbourne, plans to fund the acquisition with a new debt facility and existing cash reserves.
It had a cash balance of $3.9 million, as at March 31.
The MNF deal is subject to a number of conditions, including board approvals and Vonex completing legal and financial due dilligence.
It would follow Vonex's acquisition of Sydney-based wireless service operator Nextel in February.
Vonex said the acquisition had increased the number of its SME customers in NSW and boosted the group's annualised recurring revenue to more than $18 million.
Vonex emerged from a trading halt on Monday, with its share price closing up 3 per cent to 16 cents.
MNF shares had closed up 8 per cent to trade at $5.34.
