After quelling media speculation regarding potential interest in its energy business, Australia’s fourth-largest mobile service provider Amaysim (ASX: AYS) announced the acquisition of around 77,000 mobile subscribers from OVO Mobile for $15.8 million.
To fund the deal, Amaysim obtained commitments from its banking syndicate to increase its debt facility by up to $6 million and follows a separate $14 million senior debt facility increase in December 2019 to fund the acquisition of telecommunications company Jeenee.
Currently, OVO is the largest independently owned asset-light Australian mobile virtual network operator (MVNO) outside of Amaysim.
The company offers pre-paid plans on a non-commitment basis which gives Amaysim the opportunity to grow its customer base in a value accretive way.
With the transaction expected to be completed “imminently”, Amaysim said the acquisition would accelerate one of its strategic initiatives to grow subscriber numbers, thereby bringing its recurring mobile subscriber base to over 820,000 and a total subscriber base of 1.17 million.
According to Amaysim, the deal will mean that existing OVO subscribers will be managed under the Amaysim brand and will benefit from its revitalised network supply agreement with Optus.
The acquisition is expected to be earnings accretive in the next financial year with an “increased earnings contribution in FY2022 and beyond”, the company said.
To further allay concerns about customer migration and integration, Amaysim declared that it plans to migrate subscribers in less than four months, following the recent migration of around 41,000 Jeenee subscribers in less than three months.
With the deal announced and set to complete, Amaysim said it expects to close out the current financial year within its underlying EBITDA guidance range of $33–$39 million. This is despite delivering a 13% increase in recurring subscribers in the past three months and a 30% increase compared to Q2 2019.
“The acquisition is further evidence of the execution of our strategic initiative to grow the recurring mobile subscriber base, both organically and through bolt-on acquisitions,” said Amaysim’s chief executive officer and managing director Peter O’Connell.
“Under our asset-light operating structure, we are able to scale the subscriber base with no, or nominal, additional resources, delivering positive future earnings from the acquired base,” he said.
Shares in Amaysim were 16% higher up to $0.42 in morning trade.