Highlights:

• 5GN has entered into an agreement to acquire a privately owned data centre in North Sydney; the purchase price is $2m, which is 3 times EBITDA.
• The all cash acquisition will be funded from existing operating cashflow and cash reserves.
• Annualised revenue is reported at $1.3m and EBITDA $750k. Capital expenditure required to achieve 100% capacity is expected to be $500k.
  Acquisition provides access to the rapidly growing North Sydney technology corridor.
• Combined capacity now exceeds 720 racks across owned and operated data centres in Adelaide, Melbourne and Sydney.

5G Networks (ASX:5GN), a licenced telecommunications carrier offering seamless data connectivity, cloud and data centre services, is pleased to announce the acquisition of North Sydney data centre (NSDC), located in St Leonards, from Servers Australia Pty Ltd.

This strategic investment will enable 5GN customers to gain access to a high-speed data network by connecting directly to the data centre via dark fibre once the new rollout is complete. Cross-selling of infrastructure aligns with the company’s focused acquisition and growth strategy of identifying value-accretive opportunities for expanding its fibre network and cloud services, establishing further opportunities for revenue growth as well as extending its infrastructure capacity.

The NSDC houses over 120 data centre racks with current utilisation at 32%. This acquisition expands the 5GN Data Centre capacity to over 720 racks, all connected to a secure, national high-speed network. The acquisition will accelerate the continued execution of the 5GN wholesale channel strategy for infrastructure and data centre services. It will also open new opportunities by offering its national data network and cloud services to existing NSDC customers who include carriers, hardware vendors and managed IT providers.

North Sydney accommodates many of the top tier digital providers in Australia and the location brings local and easy access for IT staff to save valuable travel time in managing their critical infrastructure. The NSDC facility has been purpose-built with 1MW of site power availability, cooling and power generators installed in addition to geo-diversity in network access to Australia’s leading service providers.

5G Networks Managing Director, Joe Demase, stated:
“Continued focus on growth through profitable enterprise services underpins this strategic acquisition. The Sydney market is well supported by several larger tenants, who have a significant appetite for data centre space, as a result of the growing requirement for digital infrastructure to support the explosive adoption of cloud services. Through continued investment in 5GN’s fibre rollout, our Sydney data centres will be connected to a nationwide 10GB data footprint, which offers dedicated and secure access coupled with enterprise grade performance. This is critical in supporting our existing customers through their digital journey, in addition to our new and emerging Indirect channel.”

5G Networks (ASX:5GN) is excited to announce the introduction of Servers Australia as the initial partner for its recently announced indirect channel. The channel agreement includes an initial 2-year term with a minimum spend of $750,000 over that period.

5GN will provide Servers Australia with data centre capacity across its city-based data centres in Melbourne, Sydney and Adelaide. Importantly, the agreement also delivers Servers Australia with the opportunity to resell the 5GN Cloud solution together with high-speed fibre networking which securely connects the geographically diverse data centres to a national high-speed network footprint.

Servers Australia have positioned themselves as a leader in the premium infrastructure market as a service cloud provider. This partnering arrangement will support their expansion strategy in addition to strengthening the 5GN channel strategy for accelerating revenue growth.

5G Networks Managing Director, Joe Demase stated:
“5GN is delighted to welcome Servers Australia as their first indirect channel partner. As a market leader, Servers Australia is a major player in the hosting market and therefore represent a significant signing for our business. This development underlines the 5GN value proposition in providing end to end services which deliver more value than simple data centre co-location. It also highlights that channel partners are demanding a combination of choice and simplicity in supporting the digital experience for customers. The ICT market is filled with similar hosting and managed server providers who are seeking a broader range of digital services which 5GN can seamlessly deliver.”

Mr Jared Hirst, CEO of Servers Australia, noted:
“We are thrilled to be able to include 5GN’s end-to-end solution as an alternative to the major data centre providers. With our focus to become Australia’s most trusted and innovative hosting provider, this new partnership with 5GN will allow us to provide a diverse packaging of carrier and support services for our customers. Gaining the flexibility to select a broader range of secure cloud solutions also unlocks a number of new markets for our business and we’re excited by this prospect.”

5G Networks is excited to announce that we’ve been recognised for our achievements as the winner of the ‘Editor’s Award” in the fastest growing IT Services Award “CRN Fast50”, as presented last Friday by industry publication CRN Media. The announcements were made at the awards ceremony held on 21 November 2019 at the Sofitel Wentworth, Sydney NSW.

Many companies across Australia participated in the awards, ranging from industry verticals such as Managed IT providers, Consultants, Software Development, Networking, Security, Integration, Infrastructure, Data Centre Services, Telecommunications and more.

To be recognised with this award is an exciting milestone for the organisation, which has demonstrated explosive growth in FY19, with revenues achieving +800% in growth from the previous year. It also highlights the successful operational capability in transitioning from 24 staff and a small number of offices in Melbourne to becoming a national IT Service Provider with 12 offices nationwide and over 200 people.

5G Networks Managing Director, Joe Demase was extremely proud when he stated.
“We are extremely excited to have been recognised with the Editor’s Award in the CRN Fast50 and this absolutely rewards the tremendous amount of work achieved from all our people in the 12 locations across Australia. To think that we have now integrated 6 businesses in 2 years by building and maintaining a culture of trust, collaboration and teamwork is testament to the quality of people who work at 5GN; they really care about each other and how we deliver service value for our customers. I am so very proud of the teams that have worked tirelessly over the past 2 years in making this business a success.”

With the strategy focussed on accelerated revenue growth the business is also excited to announce that it has today launched the new Indirect Sales Channel, with the appointment of Nigel Burke as the National Channel Manager. Nigel will lead the new Indirect Sales and Partner Channel for 5G Networks, seeking to build a partner community which can immediately optimise the digital assets 5G Networks enjoys across the country to grow new revenue streams.

Mr. Burke has been involved in the IT, Internet and hosting industries for the past 22 years. His experience includes sales, marketing and technical knowledge. Mr Burke founded AVS Networks in 1997 providing hosting solutions to the Australian market, including a private cloud hosting platform with new and innovative commercial and pricing models.

Mr Burke was emphatic when he noted.

“The aggressive growth strategy attracted me to 5G Networks. I am impressed by their achievements to date and I want to be part of the future growth. 5GN has an amazing team and is a player to watch in 2020. We have big plans for the channel market”.

5G Networks (ASX:5GN) is excited to announce the appointment of Mr. Jason Ashton as Non-Executive Director. In addition to Jason’s board role he will provide strategic industry advice and assist in driving 5GN’s growth and acquisition strategy.

Mr Ashton has 25 years-experience in the Internet and Telecommunications industry. A successful entrepreneur and Executive, Mr Ashton co-founded and built two separate, successful Internet infrastructure businesses – Magna Data Pty Ltd (1993) and BigAir Group Limited (“BigAir” ASX:BGL) (2002).

BigAir was established in 2002 as a network, cloud and managed services business. The group built a national high speed network across the largest cities in Australia and a large number of regional centres, offering high speed data and broadband services using next generation wireless technologies. In 2016, after numerous acquisitions, Big Air reached revenues of over $79 million in 2016, until it was sold to ASX-listed Superloop (SLC).

BigAir’s growth was underpinned by an impressive 39% 5 year CAGR of revenue and 34% 5 year CAGR underlying EBITDA.

5G Networks Managing Director, Joe Demase stated:
“We are extremely excited to welcome Jason to the board as he possesses a wide range of experience in the telco, cloud and managed services segments; our core business streams. Jason has a strong understanding of the enterprise market and the growth opportunities that lie within. Given the rapid growth of 5GN to date, the board believes the company is in an ideal position to welcome Jason’s expertise to support and accelerate the successful execution of our growth strategy. Jason will bring a diverse range of business skills with valuable experience having completed numerous acquisitions and his in-depth knowledge of the sector. We have maintained a healthy relationship over the years, and t will be great to be working together.”

Mr Ashton stated:
“I look forward to adding value to 5GN in an industry that I am extremely passionate about, having worked within that environment all my life. 5GN’s achievements to date are well regarded by the market and are particularly impressive to me; I look forward to assisting the team and being part of this exciting growth journey.”

Australia’s telecommunications sector ranks fairly high on the list of sectors in which there’s rarely (if ever) a dull moment.

Such a rapid pace of change can create a tricky minefield, but there’s also plenty of interesting investment narratives within the space.

Broadly speaking, the commercial use-cases within the sector can be broken down into three stages: infrastructure providers, software or hardware developers, and processing data for end users (consumers or businesses).

For Steve Collette, principal at Melbourne-based corporate advisory firm Merchant Group, the optimisation of data management is one of the most compelling commercial use-cases within the sector.

“For me, it’s the idea of how ubiquitous data is when we think about things with inelastic demand,” he told Stockhead.

“Businesses that can service or capture the reality of that type of demand are ones that remain at the forefront of investors’ minds.”

Collette said that among listed telco stocks, there’s been a shift towards business-to-business (B2B) strategies which offer an “end-to-end” solution for data management.

And it’s a move which has been driven by strong margins on offer for companies that execute on that vision.

“The goal is to manage the process all the way from origin point of the data packets, through to how clients assemble data in the cloud and the way employees engage with that data,” Collette said.

“It takes time and those solutions don’t emerge overnight. There’s a range of other services in the market and a variety of ways to achieve that continuous outcome. But as far as an aspirational target – managed services are an important piece of the puzzle.”

‘Mission critical’

One stock focused on the B2B opportunity is 5G Networks (ASX:5GN), which offers end-to-end data management services for business customers.

The company has had a busy 2019, completing an $8m share placement in March as quarterly revenue climbed to start the year.

5GN shares ran all the way from 40c in January to $1.60, before investors hit the brakes after Q2 revenue growth came in flat at $15.4m.

And amid increased investor interest, 5GN’s executive team has focused on strategic acquisitions to execute on the first part of an end-to-end telco strategy — key infrastructure.

The company acquired a Melbourne data centre for $3m in April, followed by a $3.5m deal for another centre in the Sydney CBD earlier this month.

There’s already some big players in the space, including Vocus Group (ASX:VOC) and NextDC (ASX:NXT) — both of which have market capitalisations above $2 billion.

But speaking with Stockhead, 5GN CEO Joe Demase said the aim was ultimately to change the way companies interacted with their IT providers.

“The tech is changing all the time so you’re not necessarily competing against a Vocus,” he says.

“Demands are changing because everything relies on a cloud and high speed connection, and there’s new opportunities based on the different ways we consume information.

“If you look at data centres – everyone’s building them. No one’s turning around and saying ‘I’ve got excess capacity in my data centre.’ And it’s the same with cloud services.”

He added that 5GN also operates adjacent to the rollout of the NBN, which is more focused on the consumer space.

“For a consumer, a bad night with their connection is that Netflix doesn’t work,” Demase says. “What we’re providing is a mission critical service for companies to run their business.”

He said a typical 5GN customer is a professional services firm in accounting or law, with 200 or 300 employees that has an IT staff running its own servers.

“We can replace that server with a high speed fibre link into their office that has connectivity back to our data centre, move those servers and let our team manage it,” he explained.

“It allows them to focus on their core business — and they get faster connection speeds with a cost saving”…

Read full article here.

Highlights

• 5GN has entered into an agreement to acquire Australian Pacific Data Centres Pty Ltd (APDC) for $3.5m cash at a 7x EBITDA multiple; includes annualised contracted revenue of $1.7M per annum
• The acquisition also unlocks several cost synergies with expected benefits to be approximately $500k of annualised savings starting H2 FY20
• The Pyrmont Data Centre has capacity of over 150 racks with current utilisation at 30%; future expansion is also available
• The Tier 3 designed data centre has been built to leverage the highest standards of security and access control
• 5GN’s combined capacity now exceeds 600 racks across its owned and operated Data Centres in Adelaide, Melbourne and Sydney
• With several DC locations now connected to a national high-speed network, 5GN will fast track the launch of its ‘5GN Cloud Port’ product and new indirect channel services
• The acquisition lays out the basis for CBD and inner Sydney fibre network expansion to key clients who require data centre access

5G Networks (ASX:5GN) is pleased to announce the acquisition of Australian Pacific Data Centres, located in the Sydney CBD.

This infrastructure investment will unlock significant opportunities for continued revenue growth, cost savings, and operational synergies and is in line with the Company’s stated acquisition and growth strategy. APDC houses over 150 data centre racks, lifting the 5GN Data Centre capacity to over 600 racks, all connected to a secure, national high-speed network.

The acquisition will allow 5GN to execute its wholesale channel strategy for data centre services and introduce its fibre network and cloud services to other carriers, hardware vendors and managed service providers. The importance of the easy to access APDC location cannot be underestimated, particularly for organisations situated in the Sydney CBD. This enables 5GN to provide both wholesale and direct customers with fast and convenient access to the ISO accredited, Tier 3 designed facility to access mission critical digital infrastructure
within minutes.

The APDC facility has been purpose built to Tier 3 standards with power, cooling, redundancy and carrier grade diverse network access. The Data Centre has been operating for 15 years and has N+1 redundancy and automated management systems. The transfer to 5GN of the operating lease and purchase of the asset infrastructure allows for continuity for existing customers, carriers and the rapid expansion of the 5GN data centre services, falling in line with the Company’s cross and upsell strategy.

This Sydney expansion will support the accelerated rollout of the ‘5GN Cloud Port’, an offering which packages the features of seamless access to the cloud in addition to connectivity into all relevant data centres in Australia. This innovative networking capability will simplify and speed the design, delivery and management of mission critical high- speed data services for customers.

5G Networks’ (ASX: 5GN, the Company) Managing Director Joe Demase provides a video update discussing the most recent strategic acquisition and successful capital raise completed in April 2019.

Key points discussed include:

• Melbourne Data Centre (MDC) acquisition and update;
• Search for additional data centre expansion in Sydney and Melbourne;
• Completion of $8m placement April 2019;
• 5GN extending new services to existing customers which drives success of the strategic growth plan;
• Exploring new partnerships with public cloud providers;

5G Networks (ASX:5GN) is pleased to announce the $5.7m acquisition of Melbourne Data Centre (MDC), located in the heart of Melbourne CBD. The purchase price represents a 7x EBITDA multiple.

This infrastructure investment will unlock significant opportunities for continued revenue growth, cost savings and operational synergies. 5GN currently spend $3.8m pa in data centre services from third party providers. Accordingly, $600k of annualised synergies are expected to be realised within the first 3 months.

5G Networks Managing Director, Joe Demase stated;

“We have completed another piece of the infrastructure puzzle today. 5GN can now offer direct and managed access from our own data centre all the way through to Cloud and Managed Network services.  Through this growing infrastructure footprint we can manage the digital experience so that our services are easy to use and seamless for customers, all locally managed with a single point of contact through our national 24/7 service centres. We will now explore wholesaling the growing number of infrastructure products we can offer. “

Coupled with the recent launch of the National high-speed data network, this acquisition is an integral addition to the Company’s infrastructure investment, which augments the aggressive growth and acquisition strategy of 5G Networks.

Read full announcement here

5G Networks is pleased to announce the official launch of its nationwide high-speed Managed Data Network (MPLS) to the Australian market. Highlighted as a clear strategy since the ASX listing in November 2017, the launch of a nationwide MPLS network marks a significant milestone for the Company and its continued strategic execution.

The Company remains focussed on the growth of its data network services by augmenting and integrating the existing 5GN fibre and fixed wireless networks. The fully operational data network with dedicated speeds up to 10GB to customers will mesh secure and private access to existing Cloud, Hosting and Managed Services with seamless connectivity to all 5GN Data Centres.

Importantly, our customers can now empower their digital business capabilities through a range of private & secure connectivity solutions for single site and multi-site locations.

Read full announcement here