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Amaysim share price soars 18% on mobile subscriber acquisition

Yesterday, the Amaysim Australia Ltd (ASX: AYS) share price was making headlines after the company responded to media speculation regarding the potential sale of its energy business, causing shares to surge.

The Amaysim share price is charging higher again today but for a different reason. For some background, Amaysim is a subscription utility provider, delivering mobile and energy plans to customers around the country. The company launched in 2010 and is Australia’s fourth-largest mobile service provider.

What did Amaysim announce?

This morning, Amaysim announced it has signed a binding agreement to acquire ~77,000 mobile subscribers from mobile virtual network operator (MVNO) OVO Mobile.

OVO is the largest independently-owned, asset-light Australian MVNO, other than Amaysim. It uses the Optus network, like Amaysim, and offers pre-paid plans on a month-to-month basis without any lock-in contracts.

Amaysim expects the transaction to be completed “imminently” and for a maximum consideration of $15.8 million.

More than 74,000 of the acquired subscribers are recurring, thus accelerating one of Amaysim’s strategic initiatives to grow its recurring mobile subscriber base. This takes Amaysim’s recurring mobile subscriber base to 821,000 as at 31 May 2020, up from 726,000 as at 20 February 2020. Including the non-recurring subscribers acquired from OVO, Amaysim’s total mobile subscriber base was 1.17 million as at 31 May 2020.

For some more context, at 31 December 2019, Amaysim had 706,000 recurring mobile subscribers and 1.05 million total subscribers.

Amaysim expects to complete the migration of OVO subscribers in less than 4 months. The company has experience in this area after recently migrating around 42,000 Jeenee subscribers in less than 3 months. 

Amaysim expects the acquisition to be earnings accretive in FY21, with an increased earnings contribution in FY22 and beyond. It will be funded by a mixture of debt and cash reserves.

Guidance update

Along with the OVO acquisition, Amaysim also shed some light on its guidance for FY20. In spite of the challenges currently facing the economy, the company is pleased with the performance of the overall energy and mobile businesses in the second half of FY20.

On the energy front, Amaysim reported 209,000 energy subscribers as at 31 May 2020, up from 201,000 as at 31 December 2019.

The company confirmed it is on track to achieve full-year underlying EBITDA within the guidance range of $33 million to $39 million.

The Amaysim share price jumped 15.27% at the open and is currently sitting 18.06% higher at the time of writing at 42.5 cents per share.

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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