5G Networks expands infrastructure footprint with MDC acquisition
5G Networks has announced the AUD $5.7m acquisition of Melbourne Data Centre (MDC), located in the heart of Melbourne’s central business district.
MDC, which has been operating for seven years, was sold by private vendors who have agreed to accept AUD $1.75 million in shares as part of the purchase price. 5GN presently connects a significant proportion of its own fibre and wireless network in this prime data centre location; further enhancing secure connectivity to 5GN cloud services and mission critical data for customers.
“We have completed another piece of the infrastructure puzzle today. 5GN can now offer direct and managed access from our own data centre all the way through to cloud and managed network services,” said Joe Demase, managing director of 5G Networks.
“Through this growing infrastructure footprint we can manage the digital experience so that our services are easy to use and seamless for customers, all locally managed with a single point of contact through our national 24/7 service centres. We will now explore wholesaling the growing number of infrastructure products we can offer.”
This infrastructure investment will unlock significant opportunities for continued revenue growth, cost savings and operational synergies. 5GN currently spend AUD $3.8 million per annum in data centre services from third party providers. Accordingly, AUD $600,000 of annualised synergies are expected to be realised within the first three months.
Currently, MDC is operating at 40% capacity. More effective data centre utilisation will be achieved through meeting existing customer demand to drive profitable revenue growth, underpinned by the considerable EBITDA returns generated by data centre services.
The purchase price of AUD $5.7m, which represents a 7x EBITDA multiple, is made of AUD $1 million cash on completion and issuing of AUD $1.75 million of shares. In the first year the vendors will receive a total of AUD $550,000 paid in quarterly payments. The second-year payment is AUD $1.250 million and final year the vendors will receive AUD $1.15 million. The vendors have contracted 5GN to supply data centre services over the next three years valued at AUD $1.6 million.
Coupled with the recent launch of Australia’s national high-speed data network, this acquisition is an integral addition to the company’s infrastructure investment, which augments the aggressive growth and acquisition strategy of 5G Networks.