Vocus to pay $861 million for Nextgen Networks

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Vocus to pay $861 million for Nextgen Networks

Vocus is set to acquire fibre network provider Nextgen Networks along with two development projects for up to $861 million in total.

Nextgen Networks, which is part of the Nextgen Group, will be acquired for $700 million. The network provider's national fibre backhaul covers approximately 17,000 km across Australia. Nextgen Group's data centre business, Metronode, is not part of the transaction.

Vocus will also pay $134 million for the North West Cable System, a 2,000km submarine cable connecting Darwin and Port Hedland to service offshore oil and gas platforms.

The Australian Singapore Cable, a 4,600 km submarine cable connecting Australia to Singapore with 100GB/s internet, will be acquired for $27 million.

There is also a deferred consideration of up to $54 million. The acquisitions are expected to be completed in three months.

Vocus is seeking to raise $652 million to fund the acquisition by issuing new shares, while the remainder will be paid off through syndicated debt facilities. The transaction is still subject to approval by corporate watchdog the Australian Competition and Consumer Commission.

Vocus executive director James Spenceley said Nextgen Nextworks would give his company fibre access to 70 data centres and fibre access to over 1,100 buildings.

Vocus chief executive Geoff Horth added that the addition of Nextgen Networks completes Vocus' fibre infrastructure footprint in Australia.

"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 regional and remote areas on one owned network," Horth said.

Vocus was involved in two of the biggest acquisitions in the Australian ICT industry in recent years. It merged with consumer telecommunications company M2 Group in February, bringing residential and small business brands Dodo, Engin, Commander and iPrimus onboard. Perth telecommunications rival Amcom was also merged into Vocus in June 2015.

The combined company's profit tripled in the half-year ending 31 December 2015 to $27.4 million. Revenue was up 181 percent to $176.3 million, not including M2's performance.

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