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Vonex seals the deal on earnings accretive Nextel acquisition

By Trevor Hoey. Published at Feb 3, 2021, in Technology

Telecommunications innovator Vonex Limited (ASX:VN8) confirmed on Tuesday that the company had completed its acquisition of the Nextel business, effectively closing a proposed deal which was signed off as a binding term sheet in mid-December.

The total consideration for the acquisition was approximately $1.6 million, including $315,000 in cash which has subsequently been more than offset by a recently received R&D refund of $541,000.

As a backdrop, Nextel is a provider of telecommunications services to business customers and it is recognised as an industry leader in the design, installation and maintenance of voice, data and communications networks.

Nextel is an established single-source provider to small-to-medium enterprise (SME) businesses with expertise in rolling out wireless, fibre and RFID networks, as well as delivering structured cabling, telephony systems and electrical fit-outs to large-scale projects.

Consequently, as well as injecting additional revenue streams, Nextel brings new areas of expertise, effectively expanding Vonex’s already impressive diversified product offering.

In fiscal 2020, Nextel generated EBITDA of approximately $450,000 on revenue of approximately $2 million, with infrastructure and specialised projects being a key driver.

Nextel also brings a highly capable and experienced team that is well-positioned to drive further growth from immediate cross-selling opportunities.

Established relationships and recurring income from big corporates

The group also has valuable long-term relationships with tier-1 carriers, network partners and customers spanning a range of industries, including LJ Hooker, Endemol Shine Australia, 4 Pines Brewing Co, Lifeline and the Sydney Harbour Federation Trust.

Nextel’s established position in high volume markets such as aged care and education, particularly in the New South Wales market has the potential to add considerable value.

Another important aspect of the Nextel acquisition is that it will boost Vonex’s recurring revenue and earnings which provide investors with predictability, and on this note managing director Matt Fahey said, “Acquiring Nextel’s well-established operations will be instantly accretive to Vonex’s customer base, carrier relationships, recurring revenue and earnings.

‘’Nextel will empower Vonex to drive value for our wholesale and retail customers through new products and expertise, and it provides us with a highly capable team on the ground through whom we can capitalise on tremendous growth opportunities in the Sydney and wider NSW market.

“We look forward to rapidly integrating Nextel’s operations into Vonex’s fast-growing existing business.”