And no, it's not Telstra Corporation Ltd (ASX: TLS), which is up 1.3%.

The ASX telco share in question is Vonex Ltd (ASX: VN8).

The microcap company closed yesterday trading for 7.7 cents and is currently trading for 9.4 cents, giving it a market cap just north of $31 million.

So, what's piquing ASX investor interest today?

ASX telco share soars on cash flow outlook

Investors are bidding up the ASX telco share today after the company reported it had made the final cash payment to Symbio Holdings Ltd (ASX: SYM) to acquire part of its MyNetFone Direct Business.

The final payment sees Vonex complete the full $31 million in consideration payable to Symbio.

The ASX telco share reported this will result in an $833,000 monthly improvement of its net cash flow.

Commenting on the milestone, Vonex CEO Matt Fahey said:

Our completion of the deferred acquisition payments to Symbio Ltd marks the beginning of a new era for Vonex with greater financial flexibility.

We are excited to deliver further growth in the year ahead, fully unencumbered by deferred acquisition payments, as we continue to advance M&A pipeline opportunities which offer the potential to expand Vonex's customer base, geographic presence and product suite.

Vonex listed on the ASX on 13 June 2018.

How has Vonex been performing?

With today's intraday leap factored in, the ASX telco share is down 15% year to date. That compares to a 9% loss posted by the All Ordinaries so far in 2022.

Vonex reported some strong quarterly results on 29 July, which saw shares close 1% higher on the day. Highlights included record quarterly gross unaudited revenue of $10.5 million, which was up 81% from the prior corresponding period.

The post 'New era': Why this ASX telco share is soaring 22% appeared first on The Motley Fool Australia.

The substantial price movement comes after the company announced a new acquisition.

Let's take a closer look at today's news.

The Vonex share price is rising

In a statement to the ASX, Vonex says it has agreed with MNF Group Ltd (ASX: MNF) to purchase part of its Direct Business for $31 million.

According to Vonex, the Direct Business "sells cloud phone, internet and mobile services directly to small and medium enterprises [SMEs] and residential customers in Australia, as well as [having] a dedicated audio and video conferencing business."

In 2020, Direct's revenue was $15.6 million – 89% of which came from its business customers. Direct's earnings before interest, taxes, depreciation, and amortisation was $5 million in 2020.

Vonex says the transaction will "materially" expand its presence with Australia's SMEs and retail customers. The company claims it will acquire just over 5,200 business customers through the transaction. It also says today's purchase will allow it to expand its presence in Melbourne.

Vonex will pay $20 million upfront to MNF while the remaining $11 million will be deferred and payable in 12 monthly instalments after completion of the deal. Vonex expects the deal to be finalised at the end of next month.

The business will enter into a new debt facility to meet the upfront payment then expects future revenue, with some debt and/or capital raising, to pay the instalments.

As well as the jump in the Vonex share price, MNF Group shares have also been buoyed by today's news. They've closed the day 7.58% higher at $5.33.

Management commentary

Vonex Managing Director Matt Fahey said:

We would be delighted to welcome MNF's Direct Business and its customers to the Vonex group. As the new 'work from home' paradigm has become part of life for more Australians, we have increasingly focused on providing Australian SMEs with telco services that are reliable, affordable, flexible and scalable.

Migrating and integrating the Direct Business with our own will bring us a meaningful national footprint and help us to gain the scale through which we can continue to deliver strong value to customers and investors.

MNF Group CEO Rene Sugo added:

The divestment of these direct businesses is in line with our strategy to simplify MNF's business and drive growth in Communications Platform as a Service (CPaas) and Unified Communications as a Service (UCaaS) services. Importantly, funds from the sale will be reinvested into our growing wholesale business and our expansion offshore. Assuming all conditions are met, we expect the sale to be completed by the end of July 2021.

Vonex has been a long-term partner to MNF Group, and we have been very impressed with their technical capability and detailed migration plan. This was a significant factor in our decision to select Vonex to acquire the Direct Business.

Vonex share price snapshot

Over the past 12 months, the Vonex share price has increased by 52.4%. Since reaching its all-time high of 32.5 cents a share in February, the company's value has fallen 50%.

Vonex has a market capitalisation of $30.9 million.

The post Why the Vonex (ASX:VN8) share price surged 10% appeared first on The Motley Fool Australia.

At the time of writing, the VoIP network provider's shares are up 6% to $5.25.

Why is the MNF share price charging higher?

Investors have been bidding the MNF share price higher today after it announced an agreement to sell part of its Direct Business to Vonex Limited (ASX: VN8).

According to the release, the two parties have signed a non-binding term sheet for $31 million. This values the direct business at approximately 2x revenue.

Management notes that the sale is in-line with MNF's strategy to simplify its business, grow recurring revenues, and focus on growing the MNF wholesale business, Symbio.

As part of the term sheet, MNF and Vonex intend to enter into a binding five-year Symbio wholesale supply agreement for phone numbers and minutes. This wholesale agreement is expected to retain in excess of $3 million per annum in long term revenue.

The deal remains conditional on satisfactory outcomes of due diligence, Vonex receiving funding, and board approvals from both parties. If everything goes to plan, MNF expects that an asset sale agreement will be executed in July.

Which business is being sold?

The release explains that the Direct Businesses that form the sale agreement include those that provide cloud phone, mobile, and internet services directly to small business and residential customers in Australia.

These customers are predominantly served by the MyNetFone brand. However, the brand is not part of the sale and MNF will retain the Enterprise and Government clients.

MNF's CEO, Rene Sugo, said: "The divestment of these direct businesses is in line with our strategy to simplify MNF's business and drive growth in our CPaas and UCaas voice services, which are in high demand. Importantly, funds from the sale will be reinvested into our growing wholesale business and our expansion offshore. Assuming all conditions are met, we expect the sale to be completed by end of July 2021."

Guidance reaffirmed

In addition to the above, the company has taken this opportunity to re-affirm its operating earnings guidance for FY 2021 of $40 million to $43 million.

The post Why the MNF (ASX:MNF) share price is up 6% today appeared first on The Motley Fool Australia.

What's driving the Vonex share price to new highs?

The Vonex share price is on the rise today as the company secured another contract to complement its wholesale business.

According to this morning's release, Vonex advised it has signed a multi-year wholesale agreement with Orange Business Services, through its wholly-owned subsidiary, 2SG Wholesale.

Headquartered in Paris, France, Orange Business Services is a communications solutions company servicing over 220 countries. The group provides hardware, cloud computing, voice and data management, network infrastructure, multimedia, security, supply chain management, and collaboration services.

Under the agreement, Vonex will provide business-grade mobile broadband services to Orange Business services across Australia. The deal will be used to support the launch of new products that will offer the latest connectivity for Orange Business Services' customers. These include clients operating within industries such as automotive, mining, oil & gas and public sectors.

Vonex noted that the latest contract award reflects its growing wholesale business. The company aims to deliver best-in-class products and services to both new and existing telco customers.

What did management say?

Vonex managing director Matt Fahey welcomed the deal, saying:

We are delighted to partner with Orange to support Orange Business Services' expansion plans in Australia. Signing this agreement is testament to the growth and maturity of our offer to small, medium and enterprise customers, as we are seeing strong growth across both existing and newly-launched products.

Orange managing director of Australasia Kevin Griffen went on to add:

With this agreement, Orange will offer enterprises the ability to combine NBN connectivity with wireless broadband services through one provider only. This will bring great simplicity as well as strong, fast and stable connection which were once reserved for MPLS and the largest companies.

Vonex share price snapshot

Incorporating today's surge, the Vonex share price has risen more than 190% over the past year and over 400% from its March lows.

Based on the current Vonex share price, the company commands a market capitalisation of around $50 million.

The post Vonex (ASX:VN8) share price explodes 23% higher. Here's why appeared first on The Motley Fool Australia.