Vocus has snapped up Newcastle's Ipera Communications for up to $9.8 million, bolstering its regional fibre optic and data centre assets.
The proposed buyout includes 55 kilometres of dark fibre in Newcastle, NSW, as well as two "geographical diverse data centres" located about seven kilometres from the city centre.
Vocus CEO James Spenceley told iTnews that the two firms had joked internally that Ipera is "very much a mini-Vocus".
"They provide a lot of the same services — both wholesale and corporate focus, very strong in data centres, very strong in fibre," he said.
"So I think the business itself being a mini-Vocus lends itself very well to merging in with Vocus."
Spenceley said it was likely that Ipera would be "co-branded for a period" before a permanent name change was considered.
Ipera founder Chris Deere will initially manage the Newcastle business for the combined Vocus-Ipera, with a view to transitioning into a role with "broader responsibilities within the group".
While it was likely that the Ipera data centres would be centrally managed and monitored by Vocus, local staff in Newcastle would be retained.
"Our plan is to be able to offer services to businesses in a number of key growth areas and Newcastle is one of those," Spenceley said.
"The data centre there [in Newcastle] seems to be proving very popular with local businesses. They want to be close to their data — they don't want to have to drive two hours to the city [Sydney] to change a tape or reboot a machine."
Customers include NIB Health Funds, Hunter Water Corporation and Port Waratah Coal.
Spenceley thought it unlikely that the Newcastle facilities could act as a reduced-price data centre service for city clients of Vocus, based on the lower costs of having the centres in a regional location.
"I think it is more about having that data locally than expanding and having a low cost offering for city clients," he said, adding that while "the land price is cheaper there, communication costs are more expensive".
"I think it's a trade off," he said.
Though Vocus has agreed to a purchase price of $9.8 million, half of the price is subject to a 12-month earn out.
"Initial consideration of $4.9 million will be funded 75 percent from existing cash, with the remaining 25 percent paid in Vocus shares," the firm noted in a regulatory filing.
Ipera is expected to make only a "minimal contribution" to Vocus' FY13 earnings, though it is expected to add earnings before interest, taxes, depreciation and amortisation (EBITDA) of between $2.3 million and $2.5 million "in its first full financial year (FY14)".
Ipera has been operating since 2000. Prior to being bought out, it was a customer of Vocus.