AGL makes $27.5 million offer for Southern Phone Company
- 16 October, 2019 11:41
AGL has revealed it plans to acquire Southern Phone Company Limited (SPC) for $27.5 million.
The energy company said today it had entered into a conditional agreement to acquire SPC, which AGL said is one of Australia’s largest regional telcos with more than 100,000 customers
SPC is currently owned by 35 local councils. It was established in 2002 as part of the federal government’s Networking the Nation initiative.
“AGL’s first step into the broadband and data sector, which is part of our growth strategy, builds on our strong regional presence as an energy retailer and SPC’s telecommunication services and capabilities,” said AGL’s CEO and managing director, Brett Redman.
“The acquisition allows us to create space for new products and services that meet the needs of increasingly connected customers as energy and data converge.”
“We are focused on responding to our customers’ evolving needs as we transform from a major energy retailer to a major, broader essential service provider,” the CEO said.
“We believe the acquisition, as part of our broader strategy, will create significant value for our connected customers and also for our shareholders.”
Earlier this year AGL expressed interest in the potential acquisition of Vocus Group, whose Australian brands include Commander, Dodo and iPrimus.
AGL in May made and then withdrew an indicative offer for the ASX-listed telco after it failed to agree on due diligence terms with the telco. In June, AGL unveiled a second, $3.02 billion indicative proposal to acquire Vocus but after a short period of due diligence decided not to proceed with a buyout.
“AGL is exploring investment opportunities across three focus areas: optimising our existing portfolio for performance and value, evolving and expanding our core energy markets offerings, and creating new opportunities with connected customers,” Redman said after the energy company ended the due diligence process.
“We believe there will be material opportunities for AGL as energy and data value streams continue to converge and the traditional energy sector accelerates its transformation.”
SPC last year acquired Amaysim’s fixed broadband customers for $3 million after the reseller decided to exit the segment. In March this year SPC picked up the fixed-line residential customers of MNF Group.
AGL said it intended to retain SPC’s “business operations, brand and unique product offerings focused on regional customers.”
The deal is subject to a range of conditions, including support from SPC’s shareholders.
SPC said that the offer would deliver an “outstanding return of $785,714” on each of its council shareholders’ initial investment of $2.
Our company has grown to become one of the most successful providers of fixed line, mobile and Internet communications services across regional Australia,” SPC managing director David Joss said.
“Our unique local government ownership structure has created a community focused business that has achieved great success. However, with the advent of the NBN the need for achieving a greater share of the market has significantly increased and the timing is now right for a new shareholding structure.”