Today the 5G Networks Ltd (ASX: 5GN) share price surged on higher on news that it had successfully completed the acquisition of ColoAU, a wholesale provider of data centre services and hyper-speed global networks. The 5G Networks share price is up by more than 9% and is sitting at $1.32 per share at the time of writing.
What does 5G Networks do?
5G Networks is a licensed telecommunications carrier that operates across Australia. The company supplies cloud-based solutions, data networks and offers management services.
In June the company successfully raised $18.2 million in funds to pursue growth projects through expansion of its fibre network in Sydney and Melbourne, and new builds in Brisbane and Adelaide focused on CBD demand.
What did 5GN announce today?
This morning, the news that the teclo would be acquiring ColoAU sent the 5G Networks share price spiralling higher. 5G Networks agreed to purchase the company for $2.9 million, which represents a value that is four times that of ColoAU's earnings before interest, tax, depreciation and amortisation.
ColoAU currently operates 6 datacentres in Australia, with its annual revenue sitting at $4.2 million. This acquisition will allow 5G Networks to fast track its wholesale section of business by utilising established ColoAU platforms. The company advised that it expects to realise synergies in the first 12 months, post-acquisition, in the range of $500–$700,000.
Through integration of the ColoAU network platform, 5G Networks' wholesale customers will enjoy automated self-service capabilities. 5G Networks highlights this will allow it to meet the growing demand for high-speed connectivity across cloud platforms and data centre hosting in Australia and international markets.
The deal also allows 5G Networks to implement a number of benefits including cost avoidance and strategy acceleration, as it was planning to invest and build the networking technology recently deployed by ColoAU.
Commenting on the growth potential of the acquisition, Joe Demase, 5G Networks Managing Director, stated:
ColoAU allows us to fast track a number of growth strategies we have identified including the ability to employ system automation to augment the customer fulfilment process and accelerate the speed of service delivery. We believe our channel partner program will be further enhanced by offering alternative on-demand connectivity solutions which will seamlessly connect to over 67 leading data centres once our fibre network rollout is complete. Importantly, the international architecture of ColoAU's network is also exciting as it opens the possibility of new markets and geographic expansion.
About the 5G Networks share price
The 5G Networks share price has been on solid run this year, gaining around 66% and surpassing a market cap of $100 million. Its current price of $1.32 per share is still down by 8% on this time last year, but is up more than 140% since its March 2020 lows.
