M2 Telecommunications Group has made yet another acquisition, purchasing certain assets of SME-focused telco Clever Communications for $5 million in a move it says will add a huge database of customers and data sales companies.
The announcement comes after the company acquired both People Telecom and Commander in April and June of 2009 respectively, with the former giving M2 a massive revenue boost worth $140 million. It is just one of many acquisitions occurring in the IT industry, which is in a cycle of consolidation following the financial crisis.
The company announced today it will acquire certain aspects of Clever’s business including its off-net fixed, mobile, data and virtual private network customer contracts, which are mainly composed of SMEs.
Additionally, it will take on all the property, plant and equipment of Clever used to service those customers, and will take on Clever’s dealer and agent relationships for marketing.
M2 managing director and chief executive, Vaughan Bowen, says the company will maintain a license to tuse the Clever brand and will establish a wholesale agreement to enable the company to access Clever’s business-grade wireless data service.
The company expects earnings before interest and tax, depreciation and amortisation to increase by $2.3 million.
“It’s been nearly a year since we made our last acquisition, and we have been consciously moving forward on integrating that. But we felt like this was a tidy asset to the business, and very complementary.”
“We’ve had a dialogue with Clever for some time about this. We’ve always felt this part of their business was something very core to us, and we always thought that if they were going to sell it we would be a willing customer. These businesses customers were not regarded as their core part of the business, and they were interested to dispose of it.”
Bowen says the acquisition includes access to a network of data sales companies, which provides M2 with a number of contacts it can use to add to its own business.
“We will also acquire fixed mobile contracts, everything they would have in those telco services. There are also business grade services, along with businesses which have multiple branches and so on. The database itself has many companies which are in our current target.
The move comes as a number of IT companies are either acquiring, or being acquired, in order to grow market share as the industry continues to suffer from the financial crisis. Recently TPG purchased Pipe Networks, with iiNet also recently buying Melbourne-based ISP Netspace.
“There is certainly a lot of consolidation going on,” Bowen says. “We are obviously a statistic in that and have been active in that space over the past three years. But I think 18 months ago when the industry got a shock it made vendors’ expectations a little more adjusted, and now discussions are being made on more realistic financial levels.”
Bowen is keen to point out the company doesn’t require acquisitions to grow, and says the company is moving forward organically with or without the addition of separate businesses and services.
“There are a lot of participants in the industry which are acquiring other businesses, but we are not just an acquirer. We are growing organically, we still have ambitions for growing organically and we are very much focused on that as well.”
“We are also not at all interested in the acquiring of businesses which aren’t operating in the SME market. We’re not trying to be all things to all people, because the possible mistake you can make there is when you expand beyond your level of awareness. We’re not participating in markets outside our core presence.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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