Telstra pays AU$4.5m for Inabox's Hosted Collaboration Services

Telstra has acquired the Hosted Collaboration Services business, along with a contract to exclusively supply Cisco collaboration services to the Tasmanian government.

Wholesale telecommunications and cloud services provider Inabox has announced that it has sold its Hosted Collaboration Services (HCS) business to Telstra for AU$4.5 million, including forming an agreement with the Tasmanian government to transfer the business' supply agreement to Telstra.

According to Inabox, selling the HCS business will enable it to focus more on its "core offering to provide managed communications and IT solutions to small and medium businesses and consumer brands".

"The HCS business is government focused, and while we could have extended further into the enterprise market, this would have required substantial investment, resources, and management focus," Inabox CEO Damian Kay said in a statement to the Australian Securities Exchange (ASX).

"Inabox's greatest opportunities and strengths lie in the SMB market, where we have over 1,000 customers and support over 400 channel partners around Australia. Divesting the HCS business allows us to deploy new products that target our core SMB market, and consider new strategic acquisitions."

For FY16, the HCS business will report a profit after tax of AU$300,000 on revenue of AU$3.7 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$1.2 million.

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.

The arrangement with the state government will be taken over "progressively" by Telstra throughout the course of the 2017 financial year.

"Telstra is Australia's largest Cisco-hosted collaborations solution provider, and is well positioned to support the Tasmanian government," Inabox added.

The AU$4.5 million to be provided by Telstra in cash will be used by Inabox to pay out the lease liabilities associated with the HCS business.

For FY15, Inabox recorded a net loss of AU$351,000, down 132 percent year over year from the AU$1.068 million in profit announced a year earlier off the back of its Anittel purchase.

Operating revenue was AU$64.328 million for the year, up 37.1 percent year on year from the AU$46.910 million reported during FY14, while EBITDA dropped by 22 percent, from AU$2.413 million down to AU$1.877 million in FY15.

The company has three core businesses: Enablement, which provides mass market telco services for retailers to sell to consumers; Indirect, which provides wholesale telco services; and Direct, which provides managed IT and cloud solutions. Each business contributed AU$1.978 million, AU$44.98 million, and AU$17.3 million, respectively, in revenue over FY15.

Inabox also purchased Queensland VoIP and cloud services provider Neural Networks Data Services for AU$350,000 in July 2014.

Telstra had no comment on the acquisition of HCS.