Spirit Technology Solutions has sold its non-core consumer business to Melbourne-based broadband and telecommunications company DGTek for $5.1 million.
The deal covers Spirit’s residential internet customer base and relevant infrastructure assets. The business’ offerings include services from NBN Co and other fibre network providers, covering internet connectivity for apartment buildings, greenfield and existing properties, student housing and the community housing sector.
Spirit said the deal would record a book value profit of around $2.5 million, with the proceeds to be used to double down on its strategy to focus on modern digital workplaces for SMBs to corporate clients. The residential internet unit was seen as a non-critical part of Spirit and represented less than 2 percent of revenue.
“The sale of Spirit’s non-core consumer business will enable us to focus on our strategy in the business market segment given the structural IT&T changes occurring with the way people work,” Spirit managing director Sol Lukatsky said.
“Following a rapid period of growth, we are now a large, integrated IT and telecommunications provider for businesses across Australia and we see an opportunity to move the revenue mix towards mid-level and larger corporates. These markets are more profitable and attract larger and longer contract sizes.
“DGtek is an experienced private full-fibre optic network provider who shares our view on the importance of affordable and ultra-fast internet.”
Speaking on the deal, DGTek chief executive David Klizhov said, “DGtek is very excited to acquire Spirit's consumer business, which increases our footprint to circa 35,000 ready-to-connect premises.
“The transaction will accelerate the rollout of our full fibre network across Australia, firmly establishing DGtek as a large [fibre-to-the-premises] operator.”
Spirit will potentially look to continue divesting more assets, including its fixed wireless towers, which had received a number of non-binding proposals.
“Given the material nature of this type of divestment, the Spirit board is considering these proposals and has not yet formed a final view on the divestment of these towers,” Spirit’s announcement read.