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Latest Australian M&A deal includes Nextgen Networks and two submarine cable projects.
Australia’s Vocus is on the M&A trail again, announcing the A$807 million (€541 million) acquisition of fibre backhaul network provider Nextgen Networks and two submarine cable projects on Wednesday.
The deal will be funded via a A$652 million capital raising, the telco said.
Vocus, which provides wholesale, business and government services, will pay an extra sum of up to A$54 million for the North West Cable System (NWCS) and the Australia Singapore Cable (ASC), with the final total subject to the progress of both projects.
The NWCS is a development stage project to build a 2,000-km submarine cable from Darwin to Port Hedland to serve the oil and gas sector and is due to begin commercial operations later this year. The ASC is a planned 4,600-km subsea cable linking Singapore, Jakarta and Perth. It is a 50:50 joint venture between Vocus and Nextgen Networks, but under the terms of the deal will become wholly owned by Vocus.
"The acquisition of Nextgen Networks, one of Australia’s largest national fibre backhaul networks, greatly enhances Vocus’ existing infrastructure network," said Vocus CEO Geoff Horth, in a statement.
"Owning this critical infrastructure will allow Vocus to connect its metropolitan infrastructure to Nextgen Networks’ inter-capital fibre-optic network, thereby connecting mainland capital cities to each other and to regional and remote areas on one owned network," he added.
Horth became chief executive of Vocus following its merger with M2, which was announced in September last year and took place in February.
Vocus said it will integrate Nextgen Networks infrastructure with its own alongside the integration that is already taking place as a result of the M2 merger.
It expects to generate cost synergies of A$30 million per year over the next three years, with one-off costs estimated at A$6 million. It also predicts capex synergies of around A$8 million per year.
"In addition, there are significant revenue synergies potentially available driven by an expanded product offering, including the potential to attract new customers, and cross-selling opportunities to existing clients," Vocus said.
The acquisition requires the approval of the Australian Competition and Consumer Commission (ACCC) and the fulfilment of other conditions, and is expected to close in around three months.
