M2 Telecommunications today announced that it has entered into a deal to acquire the assets of mobile services reseller EDirect for $5 million.
M2 will acquire the contracts of over 50,000 EDirect (also known as VIPtel) post-paid mobile phone customers and has entered a separate agreement to acquire the operating assets and systems used to service the customer base of the now bankrupt EDirect.
The acquisition will be funded by M2's operating cash flow. M2 also announced its intention to restructure EDirect's operations in order to bring stability and sustainability to its customer base.
The acquisition announcement comes as legal action has been instituted against EDirect by the Australian Competition and Consumer Commission (ACCC) earlier this week. The ACCC claimed that EDirect committed breaches when it accepted payments from customers to deliver services it couldn't supply on time. EDirect also allegedly intended to supply mobile services in areas where the service "in fact could not work" since they didn't have network coverage, according to the ACCC.
In addition, the ACCC alleged that mobile services offered were materially different to the services customers paid EDirect for.
The first hearing will be held in the Federal Court in Darwin on Tuesday, 17 May.