Australian telco Vocus Communications has divested half of its fiber construction division to form a new joint venture and, in a separate move, has agreed to acquire two data centers from local disaster recovery company Enterprise Data Corporation.
Vocus is divesting and selling its New Zealand construction division it gained through its FX Networks acquisition. Spark New Zealand acquired half of the new venture, called Connect 8, for an undisclosed upfront cash payment and agreed level of annual construction spend.
Vocus acquired FX Networks last year as part of a push into the New Zealand market. Spark New Zealand owns several thousand kilometers of fiber in the country and an optical transmission network.
The fiber construction division generates annual revenue of more than $8 million on average but is subject to significant volatility from period to period. The joint venture shields Vocus from that volatility.
After initial startup period, Connect 8 is expecting an annual committed revenue pipeline of between $11 million and $12.5 million. It will continue to build fiber and telecommunications assets for Vocus, Spark, and other New Zealand clients.
“The Connect 8 joint venture and its committed pipeline will help mitigate earnings volatility from the construction division, providing Vocus with a stable earnings profile from the joint venture while maintaining access to its industry expertise and substantial construction intellectual property,” Vocus CEO James Spenceley said in a statement.
EDC Deal Expands Footprint, Business Continuity Services
Vocus is paying about $18 million for the two EDC data centers and its business continuity operations. The facilities are located in Sydney and Melborne’s Mitcham, in Victoria. The acquisition will be funded from existing cash resources.
In addition to two new data centers, Vocus will bring the business continuity services to its other locations. Spencely called the services a logical extension to existing services on an earnings call.
The data centers have existing long-term customers which provides a cross-selling opportunity in addition to monthly revenue.
Vocus has made a big data center push in recent years, now owning and operating eleven data centers across Australia and New Zealand.
It expanded into New Zealand through acquisition of data center provider Maxnet in 2012. Last August, Vocus acquired the Bentley data center in western Australia from IT solutions provider ASG. Last December, it acquired the remaining 90 percent stake in a competitor called Amcom.