Quadtel CEO David Ramsay has confirmed the ASX-listed broadband products and solutions distribution company is on the verge of completing the acquisition of a national IT distributor.
ARN sources strongly point to the company securing its stake in the channel servicing future converged networks by buying out Computer Hardware Australia (CHA). The announcement could be made as soon as today's (Friday's) Quadtel AGM.
Ramsay would only confirm it has gone "down the due diligence track" with two IT distributors and that CHA was one of them, but he also said an announcement was imminent. Quadtel would only being buying one, not both, he said.
"I hope it's true," Ramsay said when asked if Quadtel had acquired CHA. "We have been looking at four and there are two still in the game. Yes, they [CHA] are one of the companies.
"We are down the due diligence track, but in terms of which way it is going to go it is not confirmed. We expect to make an announcement very soon."
Ramsay said Quadtel floated earlier this year to raise money for just such an acquisition and other growth vehicles. "A national distribution infrastructure introduces a much wider audience for our products," he said. "It will carve six to eight months off our growth curve."
According to Ramsay, Quadtel's vision is focused on the product and service opportunities around the back end of broadband infrastructure and wireless networks. Voice, data and personal digital assistants (PDAs) are converging into the networks and Internet of the future, he said and that this "requires diverse skills and a broad customer base" for survival as a wholesaler.
Ramsay said Quadtel's future place in IT&T market involves raking the above average margins available from broadband hardware - a market currently enjoying a rapid technology turnover and exponential growth in usage.
In theory these revenues are to be complemented by integration services, partnerships with content providers and the high cashflow of low margin IT distribution as an organisation such as CHA knows it.
"We are not a telco," he said. "We are in the distribution game. Our customers are ISPs, ASPs and service carriers, but it is a lot more complicated than just that.
"Our interest in an IT distributor is to fast-track our position in that market and to increase coverage [in reseller base]."
A national distribution network such as CHA has assembled introduces thousands of new value-adding and retail resellers to Quadtel's existing customer base. Ramsay said it also offers enormous opportunities for these resellers to expand their range of products and services. Quality sales staff and the customer intimacy that comes with them is also of significant value.
One thing for sure it wasn't the huge profits that lured Quadtel to IT distribution, a marketplace which in current times cuts its margins fine to keep the products and cash turning over.
"Most of the IT [distribution] companies struggle," Ramsay said. "They run on the smell of an oily rag. Theoretically, with a wider range of products, we will be able to manage it better."
A spokesperson from CHA was unavailable as this story goes on-line, but the colourful distributor has been generally understood to be on the market since its alliance with the defunct CHS fell through.
Further evidence suggesting CHA is the distributor Quadtel is acquiring came when a representative rang yesterday to pre-warn of a CHA announcement at 2.00pm today (Friday).