Vocus to create national telco with Amcom buyout

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Vocus to create national telco with Amcom buyout
Vocus' James Spenceley

Vocus Communication has struck a deal to acquire Perth-based rival Amcom Telecommunications in a deal which values the company at around $636 million.

Both companies entered trading halts today ahead of the announcement that Vocus will now acquire Amcom for $2.45 per share in an all-scrip transaction. Amcom shares sat at $2.36 prior to the halt, and at $2.09 before Vocus' October offer.

The deal is subject to shareholder and court approvals - if conditions are satisfied, the acquisition scheme will be implemented in April 2015.

The puchase will create a national telco with assets across the east and west coast, with a combined market cap in excess of $1.1 billion. It will boost Vocus' customer base (predominantly corporate clients) from 1550 to 3750.

The Amcom deal will help Vocus position itself as a national telecommunications infrastructure provider to commercial, channel and wholesale customers, said Vocus chairman David Spence.

Amcom chairman Tony Grist said it was a great outcome for both shareholder groups.

"We're creating a business that is a significant national infrastructure carrier in Australia," Grist said.

"Logically, our dominance in Perth and Adelaide and Darwin, and Vocus' strength in Sydney, Melbourne and Brisbane, in bringing the businesses together we'll have a carrier with over 2700 on-net buildings in Australia, and around 7400km of fibre in Australia and New Zealand, and over 20 data centres in Australia and New Zealand."

Vocus' 244 employees and Amcom's 366 staff will come together to create a workforce of around 610. A Vocus spokesperson said the company was not currently looking at addressing duplicated roles.

The Vocus offer values Amcom at around $635 million. Amcom had a market capitalisation of around $626 million as at Wednesday midday. At the same time Vocus had a market cap of $604 million.

Vocus CEO James Spenceley will be the head of the new combined entity, the companies confirmed. Amcom CEO Clive Stein will exit after the handover process.

Vocus signalled its intention to merge with Amcom in October after raising its stake in the company from five to ten percent.

Amcom's fibre expansion

In November, Amcom announced it had significantly expanded its fibre assets by purchasing 180km of Megaport's fibre network for $15 million, which it will lease back to the company under a 15 year agreement.

The purchase will allow it to service an extra 5000 customers and will give Amcom access to 17,000 buildings, 30 data centres (plus 18 more in the future), and around 30 NBN points of interconnect across the three cities.

Vocus owns around 600km of fibre in metropolitan areas of the country and over 4200km of fibre in New Zealand.

Vocus' growing fortunes

Vocus increased its net profit after tax by nearly $8 million to $12.9 million in its 2014 financial year, while revenue jumped by $25 million to $92.3 million. At the time, chief executive James Spenceley said the result was testament to a strategy aligned to "increasing demand for data coupled with cloud computing and IT outsourcing."

The company acquired New Zealand fibre business FX in July, as well as ASG's Perth data centre in an $11.7 million deal in August.

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