5GN acquires Inabox businesses for AU$5.7m

Cloud and networking company 5G Networks (5GN) has announced acquiring the direct businesses of wholesale telecommunications and cloud services provider Inabox for AU$5.7 million in cash.

5GN, which provides access to third-party fibre services and its own wireless network offerings, alongside a cloud suite, said the acquisition will "fast track" its network rollout across Australia.

"The AU$5.7 million transaction is the purchase of IAB's Hostworks and Anittel subsidiaries. This will provide 5GN with one of Australia's largest and most experienced cloud providers, reflected through its technical resources and national reach and coverage," 5GN said.

"The acquisition is a significant step in expanding the geographical footprint of 5GN, which will now have offices Melbourne, Sydney, Brisbane, Adelaide, Perth, Hobart, regional NSW, and Townsville. Customer numbers will grow significantly with a number of ASX top 100 companies."

According to 5GN, its total annual revenue following the acquisition will be more than AU$55 million, with the company to be made up of over 200 staff members from both 5GN and Inabox.

The increase in revenue is thanks to be able to cross-sell networking and cloud services to Inabox's existing customers, with 5GN MD Joe Demase saying it would enable the provider to "rapidly expand" across cloud, data, and managed services.

"The acquisition of an established hosting and IT services business supported by necessary infrastructure will support growth and customer demand in 5GN's core business streams. In addition, 5GN will be able to drive growth by leveraging the accelerated adoption rates of cloud services in the mid-market corporate sector," 5GN explained.

Inabox had in June said it was considering selling off parts of its business after receiving "informal approaches" from interested parties.

Inabox, whose company includes the Telcoinabox, Hostworks, Anittel, iVox, and Neural Networks brands, at the time said its businesses were "showing promising momentum".

In February last year, Inabox had raised AU$4 million via a private placement to help cover its AU$7 million acquisition of cloud services company Hostworks.

At the time, the company said the acquisition would allow it to extend its own cloud services and strengthen its position in the South Australian market thanks to Hostworks' 24/7 networks operation centre located in Adelaide.

The Hostworks acquisition also included associated companies from BAI Communications, and involved Inabox paying AU$5 million upfront and AU$2 million over an 18-month period beginning in FY18. The acquisition was expected to bring total revenue to AU$119 million in the first year.

This was soon followed by its AU$1.5 million acquisition of Logic Communications in March last year, which it said would add more than AU$1 million in earnings before interest, tax, depreciation, and amortisation (EBITDA) in FY18.

On the telco side, Inabox launched a wholesale channel mobile product utilising Telstra's 4G and 3G networks back in August 2016, allowing subsidiary Anittel to provide their more than 440 indirect and direct retail service provider customers to offer a 4G-capable mobile solution to small and medium-sized enterprises.

Citing its "strong relationship" with Telstra Wholesale, Inabox at the time said the wholesale mobile offering would ensure its IT and managed communications portfolio is market leading.

In June 2016, Inabox sold off its Hosted Collaboration Services (HCS) business to Telstra for AU$4.5 million, which it said would enable the company to focus more on its "core offering to provide managed communications and IT solutions to small and medium businesses and consumer brands".

The HCS assets were acquired by Inabox upon its AU$9.88 million purchase of rival provider Anittel in 2014, along with a long-term exclusive agreement to supply the Tasmanian government with Cisco hosted collaboration services.

Inabox also secured a AU$3.6 million deal with Total Telecoms Group to handle 3,000 public switched telephone network (PSTN) services back in June 2015, and purchased Queensland VoIP and cloud services provider Neural Networks Data Services for AU$350,000 in July 2014.

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