Here’s why the Swoop (ASX:SWP) share price is up 11% on Wednesday

Swoop picks up its fourth acquisition for the year.

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The Swoop Holdings Ltd (ASX: SWP) share price is charging higher on Wednesday after the company acquired another telecommunications player to expand its regional network.

At the time of writing, Swoop shares are up 8.67% to $2.13.

Swoop share price rallies on its 4th acquisition in 2021

Internet provider Swoop announced it will acquire Newcastle-based connectivity provider, Countrytell.

Countrytell offers high-speed internet on its own network of over 30 towers and a recently completed CBD dark fibre network. The company also provides data centre services, owning one of Newcastle’s largest facilities.

Swoop will acquire the internet services company for $4.2 million which includes $2.1 million in cash and 2.1 million Swoop shares.

It is understood that the purchase price represents a 4.2 multiple of Countrytell’s expected FY22 earnings before interest, taxes, depreciation, and amortisation (EBITDA).

The acquisition will be funded from existing cash reserves and is expected to be complete by 31 October 2021.

According to the company’s FY21 results, Swoop carries no bank debt with $17.49 million in cash and cash equivalents.

Management commentary

Swoop CEO Alex West sees the acquisition as another win for the company’s network coverage and expansion into data centre operations.

Acquiring Countrytell’s network provides another opportunity for Swoop to further expand the coverage of our infrastructure footprint in regional Australia, as well as providing additional services via its data centre operations.

The company has invested significantly in upgrading its wireless, network infrastructure
and transmission capacity; and gives us a strong springboard for continued growth in this
market. We look forward to the opportunities this acquisition provides in establishing a
Newcastle presence for the Swoop brand.

The Swoop share price is a four-bagger since IPO

The Swoop share price has come a long way since its 50 cents initial public offering (IPO)in late May.

During this time, the company has successfully completed four acquisitions (including Countrytell) to drive its regional fixed wireless network.

Swoop shares are up 72% year-to-date but for investors that managed to participate in its IPO, they’d be up a nice 430%.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned.  The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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