Thursday, 01 September 2005 06:12

Multiemedia shells out $13m for satellite company


IT and communications company, Multiemedia (ASX:MUL), has signed an agreement to acquire 100% equity of New Skies Networks Australia Pty Ltd (NSN) from Netherlands-based satellite communications company New Skies Satellites B.V.

The $13 million cash purchase comprises an upfront payment of $2 million with the remainder to be settled in 60 days.

The acquired entity, to be known as NewSat Networks Pty Ltd, will operate as an Australian registered company.

According to Multiemedia, the purchase comes with a substantial back-log of contracted secure revenue over the next three years and will extend Multiemedia's reach into the oil, gas, mining, broadcasting and government sectors. It will deliver immediate cash flow positive results for Multiemedia and its shareholders.

New Skies Networks reported total revenues of $22.9 million for the fiscal year ended 31 December 2004 and an after tax net profit of $5.4 million.

Following the transaction, Multiemedia claims it will be able to provide satellite coverage to 75% of the world's population, up from 60%, including Europe, the Middle East, Africa and Asia. According to the company, it will make Multiemedia one of the largest media port operators and satellite service providers in the southern hemisphere.

Adrian Ballintine, Founder and CEO of Multiemedia, described the purchase as good news for Australia's ICT industry and a significant investment that reflected the growing nature of the company.

"The acquisition will further enhance the delivery of high-speed two-way satellite broadband to businesses and homes in regional and remote parts of Australia and the world. The services offered by New Skies Networks are in direct synergy with our existing businesses, in particular our satellite delivery arm NewSat which is already proven to be delivering broadband to the bush under the HiBIS and Broadband for Health schemes."

The acquisition will see Multiemedia take ownership of New Skies Networks' five ongoing business lines, its Sydney head office and a substantial network of assets including two modern media port facilities in Adelaide and Perth, which are set upon three acres and one-and-a-half acres of land respectively. The media ports act as a gateway between the satellites and the earth to broadcast video, voice and data.

"Ownership of the media ports will create a new revenue stream for Multiemedia and eliminate costs," Ballintine said. "In the past we had to lease media port services from other companies but now we'll be able to provide them, which means some of our competitors today will become our customers tomorrow."

Ballintine commented that New Skies Satellites' decision to sell its media port business to Multiemedia was a vote of confidence in the company. "New Skies Satellites were comfortable with our business model and felt confident we'd do a good job of managing this aspect of their satellite telemetry and control services given our years of experience in this space."

Politically, geographically and climatically Australia offers a safe environment to house media port facilities. "Satellite technology is the future of general communications, entertainment, education and health services particularly in regional and remote parts of the world where traditional cable copper fibre networks are not appropriate," Ballintine said. "We expect to see greater up-take of our services as the market realises satellite communications has matured and is now an extremely affordable and effective option."

MUL shares were heavily traded and closed down 0.2c to finish on 2.2c with turnover of nearly $4 million.

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