Comms Group acquires TasmaNet for $10M

Comms Group has signed a binding agreement to acquire the business and assets of TasmaNet, a provider of premium communication and managed IT services to the Tasmanian Government and businesses in Tasmania for $10 million.

The acquisition is structured with $8.5 million payable upfront and an additional $1.5 million due within 30 days of completion.

In a statement to the Australian Securities Exchange (ASX), Comms Group said this will add key network assets, corporate and government customers and deliver “significant expected revenue increase to $75m per annum, with expected underlying annualised EBITDA of $9m to $10m”.

The acquisition will deliver a portfolio of corporate data services, cross-sell opportunities and the potential of expanding the provision of government and corporate IT and telecommunications (IT&T) services to other Australian states.

Comms Group CEO Peter McGrath said this will be “transformational” for the IT service provider and “aligns” with its acquisition strategy to expand domestic service capabilities.

In addition to increasing “market share into the government and corporate mid-market sectors, adding to the cloud service provider’s “geographical reach and materially improving” its “financial performance”.

He also noted the addition of a “highly talented TasmaNet team” with “decades of experience bring decades of experience in delivering exceptional service to business and corporate customers.”

Comms Group, through the acquisition, will have access to a “significant fixed wireless (non-NBN) broadband network in Tasmania”.

The acquisition will also enhance the cloud service provider’s financial position, adding “proforma annualised revenue of approximately $19 million, with over 95 per cent recurring revenue”, Comms Group stated.

Additionally, the acquisition will contribute an annualised EBITDA of around $4 million.

Following the acquisition, Comms Group expects combined proforma annualised revenue of approximately $75 million and annualised underlying EBITDA of $9 million to $10 million.

The company reaffirms its FY25 standalone guidance for revenue of $55 million to $57 million and EBITDA of $5 million to $6 million.

The acquisition and related transaction costs will be funded through a $7.0 million equity raising via a placement and underwritten, non-renounceable entitlement offer.

As well as a committed $10.7 million debt facility provided by Regal Funds Management, with $4.0 million allocated to fund the acquisition and an additional $6.7 million to refinance existing senior debt if required.

TasmaNet will also bring significant private cloud (Infrastructure as a Service) assets in both Tasmania and the mainland for government and corporate clients, will also be added through acquisition.

As well as a fibre optic network through the Hobart central business district, together with network facilities in that city and Launceston.

There will also be data centre assets across Australia to extend and upgrade Comm Group’s existing network capabilities.

“With the planned novation of an NBNCo WBA [wholesale broadband agreement], this elevates the group to become an NBN direct retail service provider paving the way for future national growth, synergy opportunities and lowering the cost for NBN-based services,” it stated.

This will be in addition to a portfolio of additional cyber security solutions including firewall-as-a-service, threat assessment and prevention capabilities.

“New service offerings will also be added in data (internet), managed IT services, Infrastructure as a Service (managed private cloud services) and security services on long term contracts,” said CommsGroup.

The acquisition is set to be finalised by the end of May.