Commander lets go of Unitel for $10M

M2 Telecommunications Group Limited provides telecommunications services and IT solutions for both personal and business customers alike.

Under the terms of the agreement, M2 will make an initial payment of $10 million, with a further $2.5 million performance-based consideration, payable over 36 months. The payment will be subject to the Unitel business meeting certain agreed performance milestones over that period.

The acquisition is to be funded by a combination of M2's cash reserves and bank debt.

Unitel is an established wholesale provider of fixed line (including local access), mobile and data services to telecommunications service providers Australia-wide. Unitel and its predecessor RSL Com Partners have been delivering wholesale network services since 1999.

According to the ASX announcement, Unitel also holds the Australian distribution rights for telecommunications equipment provider Polycom. However these rights (and associated inventories) are not core business to M2 and have therefore been excluded from the assets acquired by M2 under the ‘Share Sale Agreement’.

Vaughan Bowen, managing director and CEO at M2 said the acquisition and its integration into M2’s wholesale business unit, with its consolidated earnings per share (EPS) is expected to increase by close to 50 percent or 2.9 cents per share (on an annualised basis), on approximately $37 million in additional annual revenue, taking M2's annualised revenues beyond $140 million.

The Unitel acquisition complements M2’s existing appointment as the exclusively endorsed Mobile Virtual Network Enabler (MVNE) for the Optus 3G mobile network and M2’s acquisition in May 2007 of local independent data services wholesaler, Wholesale Communications Group.

According to Bowen, the Unitel acquisition rounds out M2’s wholesale product suite, which now includes 3G mobile, wireless broadband, ADSL2+, LAR and fixed line voice services.

"Several members of the Unitel team are long serving and will now be provided with a broader career path within our strongly expanding M2 wholesale business. For Unitel’s customers, many of which are also long standing and loyal, it will be ‘business as usual’,” he said.

The news of the Unitel sale follows Commander’s announcement on 30 January of its financial problems and the need for the service provider to sell non-core businesses. .

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