ISP iiNet has confirmed the acquisition of Canberra-based service provider TransACT for $60 million, five days after rumours first surfaced of the deal.
The acquisition, expected for completion by the end of the month, would provide iiNet with at least 40,000 additional subscribers and major infrastructure components including a hybrid-fibre coaxial network in regional Victoria and a growing fibre-to-the-premises business in Canberra housing estates.
In a statement to the ASX, iiNet said TransACT had approximately $80 million in annual recurring revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) of $17 million.
An investor briefing revealed TransACT had spent $14.9 million in capital expenditure on its network, a large proportion of which was spent on expanding its assets.
However, iiNet pinpointed TransACT's government and corporate business as a key motivation behind the purchase.
"iiNet's acquisition of TransACT represents an attractive strategic opportunity to build scale in the ACT market quickly and efficiently," iiNet chief executive Michael Malone said in a statement.
"Adding 40,000 new customers, including blue-chip corporate and government bodies, as well as strengthening our network and presence in the ACT and regional Victoria, will allow iiNet to further penetrate these key markets and extend our leading customer service and innovative products to a broader audience."
iiNet will also adopt TransACT's partnership with energy utility ActewAGL, formed in 2004 which saw the companies share significant amounts of infrastructure.
However, the Canberra service provider had recently completed an 18-month internal IT migration away from ActewAGL's systems in favour of independent infrastructure.
The two companies are yet to announce how the agreement would impact the role of TransACT chief executive Ivan Slavich. Neither Slavich or iiNet chief financial officer David Buckingham would clarify management roles under the acquisition ahead of a press briefing this afternoon.
The buy follows on from numerous acquisitions made by iiNet in recent years, including regional provider WestNet, Netspace and most recently AAPT's residential customer base for $60 million.
More to come...