EFTel buys out Platform Networks

ASX-listed internet service provider EFTel has bought sub-wholesale operator Platform Networks for an undisclosed sum.

The buyout, announced this morning, would take immediate effect.

It brought 80 wholesale customers, most with less than 1000 customers each, along with a growing annual revenue of $6 million to EFTel's bottom line.

Sydney-based Platform Networks, formed in 2003, had been known to operate on a low profit margin and focused largely on wholesaling to service providers with small user bases.

It had been rumoured for sale as early as last week but until recently had planned its own initial public offering.

EFTel chief executive Scott Stavretis said the company would be run in the same capacity for the near future, including Platform's base in North Sydney.

Platform managing director David Hooton would remain with the company although his position was unconfirmed.

Stavretis said the acquisition provided improved buying power for both companies.

"With the NBN it's all about scale," he said. "So to achieve scale, while you need retail customers for a company our size you also need to get other ISPs on board so we do have that scale to connect to 121 points of interconnect on the NBN."

Both EFTel and Platform recently completed on-boarding with NBN Co for provision of retail and sub-wholesale services.

Stavretis said the companies would move to consolidate their NBN businesses into one arrangement.

EFTel had continued on an aggressive acquisition path of small and medium-sized service providers, most recently including a reverse takeover of ClubTelco.

The company reported half-year revenues of $15.3 million to the end of December last year - down from $18.3 million for the corresponding half-year - prior to the ClubTelco merger.

It had grown to more than 120,000 end-users in recent months.

Platform Networks most recently attracted media attention over a federal police investigation into a hacker which had allegedly compromised its systems as well as those of hosting provider Distribute.IT.

The hacker, dubbed 'Evil', faced charges for the Platform Networks compromise in Orange Local Court.