Wednesday, 31 March 2021 12:50

Spirit Tech to acquire Nexgen for $50 million

Spirit Tech to acquire Nexgen for $50 million Image by Clker-Free-Vector-Images from Pixabay

Listed tech provider Spirit Technology Solutions has announced that it has reached an agreement to acquire telecommunications provider Nexgen for $50 million and has also raised about $23.8 million from institutional investors.

The acquisition is expected to be completed on or about 8 April.

The company said in a statement to the ASX on Wednesday that it had also obtained an increased debt facility from the Commonwealth Bank, up by $10 million to $25 million to back the purchase.

Earlier known as Spirit Telecom, the firm changed its name to Spirit Technology Solutions last year along with its acquisition of security services provider Intalock.

The statement said Nexgen was forecast to report FY21 EBITDA of between $7.2 million and $7.6 million. The acquisition would bring 5000 new B2B clients and 100 salespeople to Spirit.

The buying of Nexgen is expected to generate $36 million in revenue, with 80% being recurring revenue.

The statement said Nexgen's business data and voice customers had an average contract term of 4-1/2 years with no customer concentration.

Nexgen sells the following products:

  • Data: Business Internet plans (NBN and high-speed fibre);
  • Voice: Local, national, international. Nexgen provides equipment and software technologies for communications across multiple modes and from multiple locations and/or devices.
  • Mobile: Vendor independent mobile plans.

“This acquisition more than doubles the Spirit portfolio of business services and assets in telco and is consistent with our strategy to bring in right-fit, right price, high-margin IT and telco businesses," said Spirit Technology Solutions managing director Sol Lukatsky.

"Additionally, this transaction gives us a much deeper presence nationally and, in particular, in Sydney and Brisbane. Adding over 100 salespeople and 5500 new customers will immediately have a material impact on our organic growth via an increased sales pipeline.”

Elie Ayoub and James Harb, joint managing directors of Nexgen, said: “As two leading companies within the telecommunications space, a combined Spirit and Nexgen will be committed to delivering superior end-to-end business solutions to our combined SMB customer base.

"Our two companies amalgamated will also sell a wider range of telecommunications products and IT services, offering greater choice and more opportunities for all our customers. We are both excited about the journey ahead and look forward to working with Sol and his team.”

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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