M2 splashes $245m on NZ's third largest ISP

ASX-listed telecommunications company M2 Group will spend $245 million to acquire CallPlus, New Zealand's third-largest internet service provider.

The deal will also see M2 take over the operation of affiliated CallPlus entity 2Talk Limited.

M2 expects the acquisition will contribute more than NZ$250 million in revenue (A$246 million) and NZ$45 million earnings before interest, tax, depreciation and amortisation in the next financial year.

CallPlus services 400,000 customers across consumer, business and wholesale markets in New Zealand. It counts 600 staff on its books and has an annual turnover of $250 million.

The company is an existing wholesale partner for M2 in NZ.

"We are thrilled to bring CallPlus into the M2 fold, at a time when it is delivering strong growth and profitability," M2 CEO Geoff Horth said in a statement.

"We ... recognise many similarities between our businesses in terms of target customers, team culture and a shared philosophy of disrupting and challenging the status quo in our respective markets."

CallPlus will operate as a standalone business unit following the acquisition, M2 said, maintaining its current management team, including CEO Mark Callander.

“It is a very exciting time in the life of CallPlus and signals a new era for the company. With M2’s wealth of experience and expertise, CallPlus is now in a perfect position to continue to grow as we focus on our drive of connecting 1 in 4 Kiwi homes," Callander said in a statement.

M2 expects the acquisition will allow it to expand further into NZ, and grow in the same markets that M2 operates in inside Australia.

The deal is scheduled to complete before June 30. It is subject to approval by the New Zealand Overseas Investment Office.

M2 will fund the acquisition through new fully underwritten multi-year loan facilities.