Telstra sells Singapore, Thailand Pacnet assets for $4.4m

Less than a year after buying up Pacnet, Telstra has decided to sell off the company's ISP assets in Singapore and Thailand to a Singaporean cloud and datacentre company.

Telstra has entered an acquisition agreement with Singaporean cloud and datacentre provider DeClout for the latter to purchase its Pacnet ISP assets and business in Singapore and Thailand for a total of $4.4 million.

The proposed acquisition, announced on Saturday, will see DeClout subsidiary Acclivis integrate Pacnet Internet Singapore's ISP assets into its existing ISP business, named OSINET, for $2.3 million. The acquisition is subject to regulatory approval from the Infocomm Development Authority of Singapore, but once integrated, the two Singaporean ISP businesses will be rebranded as Pacific Internet.

Acclivis will also acquire the entirety of Pacnet Internet Thailand for $2.1 million. The acquisition will provide Acclivis with a telco licence to operate in Thailand, allowing it to expand its cloud business in the country.

The two acquisitions are predicted to bring in over 3,000 customers to DeClout as well as a growth in revenue, with both arms of Pacnet having posted around SG$20 million in combined revenue for the year ending December 31, 2014.

"The proposed acquisition enables Acclivis to offer a one-stop regional ICT service to our enterprise customers, and give them more choices in deploying the best latency and network through our enhanced internet connectivity services in the region," said Acclivis CEO Marcus Cheng.

"The ISP segment of our business has been a strong growth area, and this acquisition will further enhance our recurring revenue stream. Our enlarged presence and capabilities will also help Acclivis expand into new markets, further driving our top-line growth and profitability."

The deals will see DeClout able to better service the B2B and B2C sectors across small and medium-sized businesses, according to DeClout chairman and CEO Vesmond Wong.

"This deal is another milestone for us, as it will allow DeClout to extend its regional presence in Southeast Asia and create more opportunities to upsell and cross-sell our cloud, technology, managed services, and other telecommunications products of the group to a broader customer base," said Wong.

"Given the customer reach of the two businesses, we are optimistic of their positive contributions to the group's financial performance in the financial year ending 31 December 2016."

Gartner has tipped IT spending in Southeast Asia to total $62 billion by 2018.

The deal comes after Telstra bought Pacnet for $697 million in December last year in an effort to double its presence in Asia. In April this year, the telco said it planned to retire Pacnet's branding and integrate it into its own business.

"The addition of Pacnet's staff, infrastructure, technology, and expertise will position Telstra as a leading provider of services to multinational and large companies in Asia," Telstra group executive for global enterprises and services Brendon Riley said at the time.

"The completed acquisition will double Telstra's customers in Asia, and greatly increase our network reach and datacentre capabilities across the region. The acquisition provides us greater specialisation and scale, including the delivery of enhanced services, such as software-defined networking, and opens up significant incremental opportunities for our business."

In May, however, Telstra said that it had discovered a security breach of Pacnet's corporate IT network, less than two weeks before finalising its purchase of the company.

Telstra revealed that an SQL injection on a web application server in Pacnet's network had allowed a third party to access its network, including the email and admin systems. It had repaired the breach before completing the acquisition, and thereafter notified its customers.

According to Telstra, it has decided to sell off the Singaporean and Thailand Pacnet assets because they did not align with Telstra's strategy to grow in the SMB segment.

"Telstra has entered into an agreement to sell the assets from the Pacnet Internet business in Singapore and Thailand to DeClout," a Telstra spokesperson confirmed to ZDNet.

"The sale is consistent with our strategy for our Global Enterprise and Services business, which includes the former Pacnet assets, to provide services to multinational companies and other large enterprises, rather than the small business segment.

"The Pacnet Internet business in Singapore and Thailand is relatively small. It was not a core part of Pacnet, and it does not align with our strategy to grow our services to multinational companies and other large enterprises. Therefore, we have agreed to sell it to a company that is more focused on the small business segment."