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Vocus completes AU$861m acquisition of Nextgen Networks

Vocus is now the owner of Nextgen Networks, as well as two subsea cable systems, expanding its fibre network by tens of thousands of kilometres across Australia.
Written by Corinne Reichert, Contributor

Vocus Communications has announced the completion of its acquisition of Nextgen Networks for AU$700 million, along with the North West Cable System (NWCS) for AU$134 million and the Australia Singapore Cable (ASC) project for AU$27 million.

The acquisition, approved in September by the Australian Competition and Consumer Commission, is due to be consolidated as of October 26.

"Nextgen Networks delivers Vocus one of Australia's largest national fibre backhaul networks, complementing Vocus' existing fibre infrastructure. The acquisition will connect Vocus' metropolitan fibre infrastructure to Nextgen Networks' inter-capital fibre network, creating a national network connecting capital cities, regional and remote areas -- owned and managed by the Vocus team," Vocus CEO Geoff Horth said on Wednesday.

"The acquisition of the North West Cable System project will enable Vocus to increase penetration of the mining and offshore oil and gas sectors. The cable is now operational, and is underwritten by foundation customers on long-term contracts."

The deal will also see Vocus pay AU$27 million to acquire 100 percent of the ASC project, which was originally a AU$170 million 50-50 joint-venture deal between Vocus and Nextgen Networks to construct a 100Gbps 4,600km subsea cable connecting Perth to Singapore and Indonesia.

(Image: Vocus Communications)

Vocus in June announced its acquisition of Nextgen Networks, which it said would put it "in a class with Optus" in terms of both fibre infrastructure and access to almost double the National Broadband Network (NBN) points of presence (POIs).

The acquisition will see Vocus expand its extensive fibre footprint in Australia: Nextgen owns a 17,000km fibre backhaul network in Australia, including operating and maintaining more than 6,000km of the federal government's blackspots fibre.

The NWCS, a $139 million, 2,100km fibre-optic submarine cable between Darwin and Port Hedland for the purpose of servicing the mining and offshore oil and gas industries in Western Australia, was switched on last month by Nextgen Group and Alcatel-Lucent Submarine Networks.

Nextgen said it installed additional capability within the subsea cable that will provide greater resilience for telecommunications services in the Northern Territory, with the cable also able to be extended in future to the Pilbara region and to other offshore locations including the Tiwi Islands.

Vocus' acquisition is being partially funded by AU$652 million that was raised through a retail entitlement offer and an institutional offer.

The completion of the Nextgen acquisition follows news earlier this month that the resignations of Vocus Communications founder James Spenceley and Amcom founder Tony Grist came as a result of their battle for Vocus leadership with Horth.

Grist's confidential proposal to the Vocus board to push Horth out by early 2017 was supported by Spenceley, alongside the suggestion that Vocus' board be formally reviewed next year.

The remainder of the Vocus board disagreed with the plan, however, resulting in Grist's resignation and the board's subsequent request for Spenceley's resignation.

"While it is disappointing to see the departing directors leave the board, these resignations are in the best interests of shareholders," Vocus chairman David Spence said on Thursday.

"We can now move forward with a fully cohesive board and executive team."

Vocus shares fell by 23 cents as a result of the leadership squabble, with CFO Rick Correll last month also resigning.

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