Internet challenger Swoop offloads wholesale voice business VoiceHub to Pivotel for $9m

Challenger internet provider Swoop Holdings (ASX: SWP) has offloaded its wholesale voice business VoiceHub to Gold Coast-based telco Pivotel for $9 million.

Swoop, which operates the Moose Mobile network, is making an early exit from VoiceHub less than three years after acquiring the Sydney-based business for $6 million.

The deal has been struck at a multiple of 5.2 and 4.5 times FY23 and FY24 normalised EBITDA respectively, and compares with Swoop’s original purchase at four times EBITDA.

“Whilst we have seen some growth since the original acquisition of VoiceHub, we have made the decision to divest this business in order to focus on our key markets and customers,” says Swoop’s CEO Alex West.

“The proceeds of this transaction will provide additional balance sheet flexibility as well as being used to fund growth in our residential infrastructure, mobile and NBN sales engine and provide a stronger operating cash position in the underlying business for FY25.”

The VoiceHub sale comprises three Swoop subsidiaries, Voicehub Group Pty Ltd, Voicehub Pty Ltd and Harbourtel Pty Ltd. Between them, these businesses provide voice services, unified communications, virtual numbers, SMS messaging solutions and advanced intelligent networking services for clients in Australia and New Zealand.

Pivotel, which provides fixed and mobile satellite solutions, private 4G/5G mobile networks and public community networks, will add the businesses to its existing wholesale voice and messaging services.

“We believe it’s a great opportunity to expand and strengthen Pivotel’s service offering, sales, and support teams, which will drive long-term growth in our wholesale voice and messaging business,” says Pivotel CEO Peter Bolger.

“As demand for cloud-based services continues to grow, so does the need to provide quality voice and messaging origination and termination services.”

The $9 million purchase price will comprise $8 million payable on completion, while $1 million will be held in escrow to be adjusted on the performance of the business for nine months after settlement which is expected to occur on 1 July this year.

“As we close out FY24 we continue to see the core underlying residential and SMB focused business units deliver strong organic growth across our key products of FW Broadband, NBN, Mobile and Voice,” says West.

“This sets up the business well for FY25 and provides additional firepower for continued organic growth in the year ahead.”

Swoop posted revenue of $43.5 million in the first half of FY24, up 17 per cent from a year earlier, leading to a 13 per cent increase in underlying EBITDA to $8.2 million.