How Will Comms Group’s $10m TasmaNet Buy Transform Its Growth?
Comms Group Limited has inked a binding agreement to acquire TasmaNet, a leading Tasmanian communications provider, significantly expanding its network assets and customer base. This strategic move is expected to lift Comms Group’s proforma revenue to around $75 million and EBITDA to $9-10 million annually.
- Acquisition of TasmaNet adds key Tasmanian government and corporate customers
- Proforma annualised revenue expected to rise to ~$75 million
- Annualised EBITDA forecast between $9 million and $10 million
- $10 million purchase funded by $7 million equity raise and $10.7 million debt facility
- Strategic expansion into government and corporate sectors with new network assets
Strategic Acquisition Expands Comms Group’s Footprint
Comms Group Limited (ASX: CCG) has taken a decisive step to broaden its domestic telecommunications and managed IT services footprint by signing a binding agreement to acquire the business and assets of TasmaNet. This Tasmanian-based provider is well-regarded for its premium communication services to government and corporate clients, particularly the Tasmanian Government, which accounts for a significant portion of its revenue.
The acquisition is set to be transformational, adding substantial network infrastructure including a fixed wireless broadband network, high-capacity fibre optic links in Hobart and Launceston, and private cloud assets. These additions not only enhance Comms Group’s service capabilities but also open avenues for cross-selling and geographic expansion beyond Tasmania into other Australian states.
Financial Upside and Market Positioning
Financially, the deal is expected to be immediately earnings accretive. Comms Group forecasts a combined proforma annualised revenue of approximately $75 million, up from its standalone guidance of $55-57 million for FY25. The underlying EBITDA is projected to rise to between $9 million and $10 million, a significant uplift from the previous $5-6 million range.
The $10 million acquisition price, representing roughly 2.5 times annualised EBITDA, will be funded through a $7 million equity raising, comprising a placement and an underwritten entitlement offer, and a $10.7 million senior debt facility arranged with Regal Funds Management. This capital structure aims to balance growth ambitions with prudent financial management.
Strategic Rationale and Growth Prospects
Comms Group’s CEO Peter McGrath highlighted the strategic importance of the acquisition, emphasizing the enhanced scale and service capabilities it brings. The deal strengthens Comms Group’s position in the government and corporate mid-market sectors, particularly in Tasmania where TasmaNet holds a dominant market position with over 600 government and business customers, including long-term contracts with the Tasmanian Government.
In addition, the acquisition introduces new service offerings such as Firewall-as-a-Service and advanced cybersecurity solutions, complementing Comms Group’s existing portfolio. The planned novation of an NBN Wholesale Broadband Agreement will also elevate Comms Group to an NBN direct Retail Service Provider, potentially lowering costs and enabling national growth opportunities.
Next Steps and Market Implications
Completion of the acquisition is subject to certain third-party consents and is expected by the end of May 2025. Meanwhile, the equity raising is underway, with new shares offered at a discount to recent trading prices to encourage participation. Institutional investors have already shown strong support, signaling confidence in Comms Group’s growth trajectory.
Looking ahead, Comms Group aims to leverage the combined entity’s diversified service offerings to expand beyond Tasmania and capture larger corporate customers nationally. The acquisition marks a significant milestone in Comms Group’s strategy to increase scale and market share in Australia’s competitive telecommunications and IT services landscape.
Bottom Line?
Comms Group’s acquisition of TasmaNet sets the stage for accelerated growth, but execution risks and integration challenges remain key watchpoints.
Questions in the middle?
- How smoothly will Comms Group integrate TasmaNet’s operations and culture?
- What synergies and cost savings can realistically be achieved post-acquisition?
- Will Comms Group successfully leverage its new NBN Retail Service Provider status for national expansion?
