The telco innovator Vonex has announced that it expects annualised recurring revenues, or “ARR”, to increase by around 50% to $14m from a reported $9.1m in the September 2019 quarter, after completing due diligence on its acquisition of telco wholesaler, 2SG.
Vonex has now executed a binding agreement to acquire the telecommunications and data wholesaler with completion expected by the end of the month. 2SG Wholesale previously reported an ARR of $7m for the 2019 financial year, according to Vonex.
Vonex management said that its strategy was to consistently grow its ARR and the last four financial quarters have seen incremental growth of around 5% per quarter. However, the strategic acquisition of 2SG will accelerate that growth path with 2SG delivering a 10-fold increase in ARR overnight.
Vonex announced the acquisition back in November 2019 and has since been undertaking its due diligence on the ‘going concern’ aspects of the 2SG business and the successful conclusion of that process was a key condition precedent to the deal.
2SG is a Brisbane-based telco that has received its revenue by delivering hardware and connectivity solutions to various Australian Managed Service Providers, ISP’s and System integrators.
The company said it expects 2SG to deliver a positive EBITDA in the range of $750K in FY21 and a return on investment within three years.
The co-founder of 2SG, Jason Gomersall, will be appointed to the board of Vonex as a non-executive director. Mr Gomersall has long been at the forefront of the telco market, starting out as a foundation franchisee of the Optus World retail chain. Jason is also founder, CEO and managing director of i-Seek Communications.
Vonex Managing Director, Matthew Fahey said: “We are excited to welcome Jason Gomersall, who is highly regarded in the telecommunications industry and adds important industry specific skills and experience to our Board as a non-executive Director”.
Such a rapid rise in ARR through acquisition is to be commended and the company appears to have delivered on its revenue growth strategy in spades. 2SG’s wholesale business is also a great fit with the existing, multi-award-winning services already offered by Vonex.
Vonex is targeting a continuation of its accelerating revenue growth when it completes testing and launches its own advanced communications technology, Oper8tor into the Australian mobile broadband market.
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