05 January 2016
by Ruth Liew
Amaysim buys Vaya in $70m deal
Amaysim chief executive Julian Ogrin says the Vaya business presented a great opportunity.
Australia's fourth biggest mobile phone provider, Amaysim, has bought telecommunications group Vaya for $70 million in a takeover that will support the company's goal of securing 1 million users by 2019.
Amaysim, which listed on the Australian Securities Exchange in July last year, bought the Brisbane-based mobile virtual network operator in a deal that it said will be "materially accretive" by fiscal 2017.
The acquisition will add about 140,000 subscribers to Amaysim's existing 718,000 customer base, a move that brings forward the company's goal of achieving 1 million customers.
Investors reacted positively to the deal, sending the company's share price up by 21 per cent to trade at $2.80 on Monday. Amaysim shares were offered at $1.80 in the July IPO.
Julian Ogrin, chief executive of Amaysim, said the buy will "significantly improve our milestone" targets.
"It accelerates our growth strategy, it's a strong strategic set-up, it compliments our existing business," he said. "We see a big role for [consolidation] over the next couple of years, and I think the Vaya business was a great opportunity."
Vaya employs 40 employees, with 10 based in Australia and another 30 in the Philippines. Mr Ogrin said no job losses are expected from the transaction.
Vaya operates in the sub-$20 mobile telecom segment in Australia and, like Amaysim, uses the Optus 4G Plus network to provide services to customers. It is a pure online player with no retail presence, with the most of its subscribers on its $18 monthly offering.
The acquisition is priced at $70 million with an equity value of $20 million. Vaya currently has $50 million of liabilities to Optus, payable over two years.
Amaysim plans to keep the Vaya brand separate to its own operations, and said it would be "business as usual" for the two companies.
"This is a rare opportunity to significantly grow our number of subscribers on the same network and in a complementary market segment," Mr Ogrin said.
Amaysim's deal is the latest in a string of M&A activities in Australia's telecommunications sector over the past year as technological change gains pace.
Vocus Communications merged with M2 Group last year, while TPG Telecom made a play for rival iiNet in a $1.56 billion deal.
Mr Ogrin expects more M&A activity to be a major theme in 2016 across the sector, as competition heats up and players in the market require more muscle to survive.
He is also not ruling out further acquisitions at Amaysim this year.
"We've got a very strong relationship with Optus and we think if one of these opportunities [crops up again], absolutely we'll be happy to look at it, as long as it's a strategic fit to our organic growth strategy," Mr Ogrin said.
Amaysim's share price has risen about 60 per cent since its listing in July.
The company has a market valuation of $405 million, and posted around $10.2 million in profits last year. Despite holding fourth place in the Australian telecommunications market, it is still a small player compared with behemoths such as Telstra, Optus and Vodafone.
The group is co-founded by German telecoms executive Rolf Hansen and Australian executive, Peter O'Connell, and was launched in May 2010. The business model is focused on gaining customers using a potent mix of retail partnerships throughout Australian shops, extensive online advertising and positive word of mouth.