​Vocus, M2 merger to create Australia's fourth-largest telco

Entity will have combined revenue of $1.8 billion

Vocus Communications (ASX: VOC) has entered into an agreement with M2 (ASX: MTU) to merge, creating the fourth largest telecommunications firm in Australia.

M2 shareholders will receive 1.625 Vocus shares for each M2 share, if approved.

The combined firms will have revenues of $1.8 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) of $370 million.

According to an ASX statement, this will create a trans-Tasman telco with proven capabilities for every individual, corporate and government entity in Australia and New Zealand.

The merged companies will have a product portfolio including retail Internet, electricity and gas, IP voice, wholesale Internet, data centre and cloud services as well as dark fibre.

Founder and CEO of Vocus, James Spenceley, will continue on the combined board as executive director with a focus on telco infrastructure strategy. M2 CEO Geoff Horth will be appointed CEO of the merged group.

Meanwhile, executive director and founder of M2 Vaughan Brown will join the combined board as executive director.

M2 chairman Craig Farrow said that M2 and Vocus are an “excellent fit”.

“Both have successful track records of creating substantial value for shareholders and together, we will retain that focus. Our ability as a merged company to capture future growth opportunities in Australia and New Zealand will be significantly enhanced.”

In August, Vocus reported revenues of $149.8 million, boosted by acquisitions of FX Networks in New Zealand and Enterprise Data Corporation (EDC) data centres in Australia.

Vocus purchased the data centres in February for $23.5 million. Meanwhile, it acquired FX Networks for $94 million in June last year.

It also picked up Amcom Telecommunications.

Vocus revenue was up from $92.3 million last year.

Earlier this year M2 acquired Call Plus, New Zealand's third largest ISP, for $245 million.

In addition to 2Talk and Call Plus the company operates Call Plus Business and consumer brands Slingshot and Orcon.

However, it failed in its bid to acquire iiNet, losing out to TPG.

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Tags M2 Telecommunications GroupVocus CommunicationsMergers and acquisitions

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