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Vonex outlines impressive growth opportunities off the back of acquisition success

Today, telecommunications group Vonex Ltd (ASX:VN8) published its 2020 Annual General Meeting, which highlights their strong operational and financial performance and future growth schemes.

As the company develops, delivers and licences its advanced communication technologies, generation of recurring revenue continues to drive strong growth.

Vonex possesses a three pillar growth strategy of Retail, Wholesale and Acquisition, with the latter encompassing many key drivers and achievements for all pillars and the company as a whole.

At the forefront of Vonex’s achievements of fiscal 2020 is its March acquisition of 2SG Wholesale.

As an established wholesale provider of hardware and connectivity solutions, the acquisition has delivered a new dimension to Vonex’s business, bringing 150+ new wholesale customers and expanding SME (small to medium enterprise) product offerings.

Through 2SG, Vonex has been able to provide fast, secure, business-grade wireless broadband, meeting strong customer demand amid the rise of COVID-19 induced working from home – a trend that is set to continue.

Consumer demand will assist in utilising immediate cross selling opportunities; selling 2SG internet products to Vonex customers and Vonex voice services to 2SG customers.

Vonex will continue to pursue both organic and acquisition-led opportunities to grow its Wholesale business in FY21.

The 2SG acquisition also helps improve margins by providing wholesale services to the retail division of Vonex; supplying customers with an expanded product range of mobile voice products, NBN, mobile broadband and 5G.

Vonex’s annualised recurring revenue has steadily increased since its ASX listing in 2018, with the 2SG acquisition largely contributing to the 89% increase in FY20.

From a shareholder perspective, Vonex has seen an 160% rise in share price since January 2020, currently trading at $0.26 AUD.

The AGM outlined Vonex’s FY21 outlook, which presents enormous opportunities to address unmet needs among SME’s for an optimal telco service in the new ‘work from home’ paradigm.

A proactive approach to ongoing strategic acquisitions will be central to the company’s FY21 growth.

M&A advisors are aiming to find multiple transaction opportunities, specifically searching for profitable private Telco businesses with annual revenue up to ~$10m.

Targeting such revenues affords Vonex some relatively uncontested space in the Telco sector, increasing their chances of becoming the next consolidation success story.

Vonex having successfully integrated 2SG Wholesale positions the company well to execute this strategy and quickly scale.