Vocus confirms $107m FX Networks acquisition

Vocus today confirmed its purchase of New Zealand national backbone provider FX Networks, in a deal the Australian company said would make it the third-largest network operator across the Tasman.

Vocus chief executive James Spenceley/Supplied.

The ASX-listed telco and internet provider halted trading on Monday morning following weeks of talks over a potential acquisition.

The deal values the Kiwi operator at A$107 million, to be paid by Vocus taking on A$49.9 million in debt and paying up to A$19.1 million in cash.

Depending on FX shareholder acceptances, Vocus will pay the rest in shares, issuing up to 13.1 million at $4.40 per share.

Vocus said it had received agreement from 77 percent of FX's shareholders and expected to complete the deal in the second quarter of FY2015.

The telco expects FX to bring in earnings of NZ$13.5 million to NZ$14.5 million in the year following the acquisition.

Vocus founder and chief executive James Spenceley said he hopes to capitalise on wholesale demand from the New Zealand national fibre to the premises (FTTP) network - the Ultra Fast Broadband (UFB) project - currently underway across the country.

FX Networks has over 4000 kilometres of fibre-optic circuitry in New Zealand, linking all the major population centres.  

It provides bandwidth for the Research and Education Advanced Network of NZ, as well as government departments such as the ministries of education and health, and the NZ Police.

The acquisition, if approved by shareholders, would create a business with A$136.4 million revenue for the 2013 calendar year.