Vocus acquires Maxnet for $9.5m

IP transit and data centre provider Vocus has acquired New Zealand-based company Maxnet for $9.5 million in a bid to enter the data centre market across the Tasman.

The acquisition gives Vocus access to a 600 square metre data centre in Auckland providing up to 30 kilowatts of power per rack, as well as a smaller, 50-rack facility in Christchurch with capability of up to four kilowatts per rack.

Vocus chief executive James Spenceley told iTnews the company would look to double the capacity of the Auckland facility once the transaction was completed.

"We've been [in New Zealand] for four years, providing IP transit. We do something like 20 percent of the country's internet so given our Australian business started in IP transit and moved into data centres, I suppose this is a natural progression for us," he said.

"We've been looking at purchasing a data centre here for quite some time."

Vocus has primarily expanded its Australian data centre business through acquisition, including purchasing facilities from E3 Networks in Sydney and Melbourne, and from Perth iX in Western Australia.

Maxnet's data centre and internet services businesses are expected to boost Vocus' earnings before interest, tax, depreciation and amortisation by $2 million in the next financial year.

Spenceley said Vocus intended to keep all of Maxnet's 43 staff.

However, the $9.5 million acquisition price is thought to be on the low side according to industry sources.

One ISP industry insider in New Zealand told iTnews that Maxnet had been on sale for the last 18 months, with an asking price of NZ$14 million.

They said the price could be as low as half the revenue, but that investors sought to back out of the deal due to the capital-intensive costs of running the ISP.

Fyx issues

The acquisition comes just two weeks after Maxnet launched a consumer internet subsidiary, Fyx, with the primary purpose of allowing customers to circumvent geographic restrictions on overseas music and video streaming services.

The service was quickly pulled from the market with the company citing "matters that require further consideration".

Despite the timing, and reports of an Australian negative legal opinion quashing the service, Spenceley said Maxnet had come to its own decision on the matter.

Though the companies were negotiating the details of the acquisition, Vocus had provided no legal advice to the ISP on the matter.

"It was just the timing of it," he said.

"There was a lot of attention worldwide around Fyx and Maxnet's board felt uncomfortable with it."

But Spenceley wouldn't rule out allowing Fyx to become available again, saying it's an exciting concept.