Vonex adds OntheNet to portfolio as part of nation-wide expansion strategy

Vonex (ASX: VN8) will add Gold Coast telecommunications business OntheNet to its growing portfolio, with the acquisition expected to increase group revenue to $52.4 million in FY2023.

OntheNet provides data network, voice and hosting/co-location services to businesses and delivered $15.2 million in proforma revenue in FY2022. Of the $15.2 million revenue, about 97% is recurring.

Its proforma earnings before tax depreciation and amortisation (EBITDA) was $1.9 million.

According to Vonex, OntheNet has a “high quality” customer base including government organisations, private schools, medical businesses, national retail and franchise chains.

Strategic acquisition

Vonex will pay $9.6 million for OntheNet, with $7.7 million to be paid in cash and the remaining $1.9 million in escrowed shares.

To fund the cash consideration, Vonex has been approved by its existing debt provider Longreach Credit Investors for $8 million, which will also cover the associated transaction costs.

Vonex managing director Matt Fahey said OntheNet was a “highly strategic acquisition” for the company.

“It expedites our plan to diversify our product suite, in particular adding market leading data network services.”

Once it has acquired OntheNet, Vonex’s annual recurring revenue is anticipated to increase 40% to about $51 million.

The combined business is forecast to generate $52.4 million in revenue for FY2023 and underlying EBITDA of $8.5 million (on a proforma basis).

OntheNet

OntheNet was founded in 1994 and primarily services businesses across Australia.

The company has established a tier three data centre on the Gold Coast in Queensland and has a highly skilled workforce of 35 employees, including a large engineering team with data networking capabilities.

Acquiring OntheNet will widen Vonex’s product capability and bring ownership of its core network, major internet exchange points and its Gold Coast data centre.

“We are very excited to welcome the talented and highly specialised team from OntheNet to Vonex and look forward to a positive 2023 financial year, as we continue to execute our strategy for organic and inorganic growth,” Mr Fahey said.