M2 Telecommunications has acquired some of the assets of collapsed telco Commander Communications from receiver McGrathNicol in a $19 million deal, with M2 expecting a $100 million annual revenue boost from the deal.
The deal is the latest in a string of acquisitions for M2, including the purchases of Wholesale Communications Group and Southern Cross Telco in 2007, followed by last year’s takeover of People Telecom, completed in April 2009.
The latter should see the company’s revenue jump from $45 million to $250 million for the current financial year, putting it on par with other telcos such as iiNet.
The latest deal will see M2 pay $19 million for all of Commander’s current contracts, the ‘Commander’ trademark and brand, all operating systems, software and equipment and selected inventories. Other brands including Australia Star, Call Australia and Newtel will be handed to M2, as well as the company’s Adelaide operations centre.
Commander’s 30,000 customers and annual revenues, reaching over $100 million, will also be transferred to M2. The company fell into receivership last year as the company struggled to pay debts in excess of $350 million.
M2 chief executive Vaughan Bowen says the company is taking opportunities during the downturn to look at assets that would benefit the core offerings of the business.
“This is an opportunity we’re taking advantage of. The short of it is we have a wholesale arm, and a retail arm, and the retail arm of Commander sells well into SMEs. People Telecom was the same, and that was a very sensible acquisition because it gave us the exact customer we look for.”
“It wasn’t jumping up onto tangents, this is core business.”
But despite the large amount of revenue gained from recent acquisitions, sending the company’s turnover in excess of $360 million, Bowen maintains the company isn’t on the prowl.
“We have done some acquisitions but we’re not desperately seeking them. There’s an element to ‘never wasting a crisis’, but you’re interested in the quality of the assets.”
Bowen says the plan for the next year is to address the large scale of the business and focus on more consolidation.
“I think that with the markets having settled a little bit, consolidation is what we’re participating in. The overriding plan is to properly take advantage of the businesses we have brought into the fold.
“There’s a bit of work to do, as our business has grown from having 100 people to having 400, but we’re keeping busy and it’s good to be growing.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
