Clever Communications (ASX: CVA) has sold its off-net business to M2 Telecommunications (ASX:MTU) business unit, People Telecom, for $5 million in cash.
With the deal, expected to go through by 1 May 2010, M2 will gain Clever’s off-net fixed, mobile, data and virtual private network customer contracts – largely comprised of SMBs.
Clever will retain its business-grade wireless data service, and M2 will enter into a wholesale agreement with Clever to access the service.
M2 managing director, Vaughan Bowen, said the acquisition was a logical fit for M2’s business and would contribute to the group’s earnings.
“The majority of customers acquired are being supplied business data services, which we will transition to our national business grade network creating economies of scale through greater utilisation of our network,” he said in an ASX statement.
Clever managing director, Scott Carter, said the sale of its lower margin off-net business was in line with the company’s strategy to focus on higher value and margin wireless broadband services.
“Clever sees strong demand in this segment of the telecommunications marketplace and believes exclusive focus on this area will enable the business to maximise its growth and profit potential,” he said in an ASX statement. “In addition, clever will further expand its successful wholesale channel with M2 entering into a wholesale agreement with Clever to access Clever’s business-grade wireless data network.”
Clever said it was considering what to do with the cash, but was looking at a dividend or capital return to shareholders.
In February M2 said acquiring Commander and People Telecom had proved smart buys, helping the company report a 115 per cent year on year increase in revenues to $188 million for the half year to 31 December 2009.