Casa Systems to acquire NBN supplier NetComm

Massachusetts-headquartered Casa Systems is seeking to acquire ASX-listed NetComm Wireless.

Casa has made a $161 million all-cash offer for the Australian company, which supplies a range of equipment for Australia’s NBN, including the network termination devices that are being used by Ericsson as part of NBN Co’s fixed wireless rollout and distribution point units used for fibre to the curb (FTTC) installations.

Under the terms of the deal, which still requires approval from NetComm shareholders and sign-off from Australia's Foreign Investment Review Board, Casa is offering A$1.10 per NetComm share. If approved, the acquisition is expected to be completed by June.

The deal has the unanimous backing of NetComm’s board.

NetComm said there would be no immediate change to the way it operates.

“This deal is a clear show of confidence in the market-leading technologies that NetComm has developed in both the fixed wireless and fixed broadband sectors,” NetComm’s chief technology officer and interim CEO, Steve Collins, said in a statement.

(The company announced today that that its managing director and CEO Ken Sheridan had stepped aside from his role due to personal issues. He will continue as an executive director, NetComm said.)

Casa, which was founded in 2003, has more than 700 employees worldwide. The company has subsidiaries in Canada, Netherlands, France, Spain, Ireland and China.

The company describes itself as providing “advanced ultra-broadband 5G solutions” and its customers include mobile network operators, mobile resellers, cable companies and fixed-line broadband providers.

Last month NetComm announced the launch of a self-install platform for 5G-based fixed wireless services, which it said could cut the cost and time connecting homes and businesses.

“Casa Systems have said that they are particularly impressed by our 5G fixed wireless self-install technology which they say complements their existing technology platform very well,” Collins said.

“The addition of our world-leading 5G customer premises equipment technologies to their platform will enable a full end-to-end solution for operators looking to deploy 5G fixed wireless services.”

HY results

NetComm today announced revenue of $94.3 million for the six months ended 31 December, representing 6.5 per cent increase on the prior comparable period. However, net profit after tax dropped from $3.7 million to $2.3 million. EBITDA dropped from $9.2 million to $8.3 million.

“The growth in revenue achieved over the half was largely attributable to the scaling of network connection device (NCD) orders from NBN and sales of fixed wireless devices to multiple telecommunications carriers around the world,” NetComm chair Justin Milne said in a statement.

“The decline in EBITDA reflects the change in our sales mix, with NCD sales having a lower margin than distribution point units, as well as higher operating expenses in part related to developing our 5G capabilities which will underpin the next phase of our growth. Our balance sheet remains strong, with $17.4 million in cash, no debt and $30 million in unutilised committed banking facilities to provide flexibility.”