Telecommunications carrier 5G Networks (ASX: 5GN) has acquired a data centre in North Sydney for $2 million thereby extending its infrastructure capacity to over 720 racks, spread across Adelaide, Melbourne and Sydney.
5G Networks announced the deal will be executed in an all-cash acquisition, funded from existing cash flow and has estimated that its value is 3-times the company’s EBITDA.
The company owns and operates a nationwide high-speed data network with points of presence in all major Australian capital cities.
The new data centre located in North Sydney also provides access to the rapidly growing technology corridor in the area, already being utilised by a growing number of Australian tech companies.
One of 5G’s most popular product offers is a managed cloud solution and associated managed services through its cloud and data centres that optimise customers’ IT and network environments.
In a statement earlier today, 5G said it acquired North Sydney data centre (NSDC), located in St Leonards from Servers Australia.
The NSDC currently houses over 120 data centre racks and sports a utilisation rate of 32% with the deal announced today expected to accelerate 5GN’s wholesale channel strategy for infrastructure and data centre services.
From a financial perspective, the deal is expected to be immediately revenue accretive with annualised revenue reported at $1.3 million and EBITDA at $750,000. 5G Networks also said that it will require $500,000 in additional capital expenditure to achieve full capacity.
The NSDC facility has been purpose-built with 1 megawatt of site power availability, cooling and power generators installed in addition to geo-diversity in network access to Australia’s leading service providers.
The deal means 5GN customers will gain access to a high-speed data network by connecting directly to the data centre via dark fibre once the new rollout is complete.
“Continued focus on growth through profitable enterprise services underpins this strategic acquisition,” said 5G Networks managing director Joe Demase.
“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,” said Mr Demase.
The deal is also expected to improve 5GN’s ability to cross-sell its services and infrastructure as its overarching acquisition and growth-focused strategy continues to gain momentum.
5GN has repeatedly declared that it is actively 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.
In addition to more capacity, 5GN said the acquisition will also allow it to offer national data network and cloud services to existing NSDC customers who include carriers, hardware vendors and managed IT providers.
The news boosted 5G Networks shares by almost 6% up to $0.975 per share in morning trade.