Internet services provider Superloop (ASX: SLC) is bulking up its fibre network in the eastern capitals through a $17.5 million acquisition of Optus subsidiary Uecomm.
The deal will add more than 2,000 kilometres of high-capacity fibre assets, including 800 kilometres of owned duct, to the Superloop network.
Superloop currently services more than 455,000 retail, business and wholesale customers, adding about 80,000 customers in FY24.
The Bevan Slattery-founded company is rapidly growing its retail consumer base which stood at 323,000 at the end of FY24 and is targeted to exceed 500,000 by the end of FY26.
The Uecomm fibre network is located across Sydney, Melbourne and Brisbane-Gold Coast central business districts and metropolitan areas, giving Superloop access to more than 1,900 buildings and about 50 data centres.
The acquisition will increase the size of Superloop’s network in key metropolitan areas, complementing the company's existing network and expanding its high-speed data and internet service offering across all three business segments comprising retail, business and wholesale.
“The location of the assets also boosts our Smart Communities ambitions, lowering capex connections to new buildings and broadacre developments,” says Superloop CEO Paul Tyler.
In February this year, Superloop secured a deal with Investa to become the exclusive telecommunications infrastructure provider for two developments comprising more than 1,100 residents, and in March followed it up an exclusive telco deal with Mirvac (ASX: MGR) for 1,400 lots across three proposed build-to-rent projects.
Superloop plans to fund the Uecomm acquisition through existing cash reserves and debt facilities with the deal set to be completed early next year.
As revealed in August when announcing its FY24 profit result, Superloop had a cash balance of $3.6 million at the end of June along with debt covenants well below thresholds that left it with “significant” capacity for merger and acquisition opportunities.
While the initial contribution of the Uecomm assets will be EBITDA neutral in the first year, Superloop says the acquisition provides greater control over a broader fibre network that will lead to cost and revenue synergies over the longer term.
Superloop says it will continue to consider other opportunities to support the growth ambitions laid out in its three-year ‘Double Down’ strategy.
The strategy reflects the company’s ambition of doubling in size by the end of FY26, a target that was aided by a 30 per cent increase in revenue to $420.5 million in FY24.
Underlying EBITDA surged 45 per cent to $54.3 million while Superloop also generated $29.2 million in free cash flow during the year – up $6 million for the year.
Superloop is targeting revenue of more than $700 million by the end of FY26 and underlying EBITA of $105 million.
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