Australian telecommunications provider Unity Group has announced the acquisition of Telstra Velocity, a Fibre-to-the-Premise (FTTP) network owned by Aussie telecom giant Telstra. The sum paid by Uniti Group for the same is $140 million.
The $140 million deal includes an upfront payment of $85 million upon completion, $20 million payment which will be payable over the next 3 years and $35 million which’ll be paid when the migration of the assets and services is completed. Telstra will also pay Uniti Group a sum of $21.6 million as licence fee to continue using its Velocity network as customer services are transferred. As part of the deal, Telstra will also become a retail service provider (RSP) of the national FTTP network of Uniti Group.
Uniti Group CEO on acquiring Telstra Velocity
Chief Executive Officer and Managing Director of Uniti, Michael Simmons says this is a remarkable milestone for their young company to have secured such a huge FTTP network which is aligned to their core strategy. The FTTP Network of Telstra can be quickly integrated to grow their core plus infrastructure earnings and it is a great way to end what has been a transformative year for Uniti Group.
The deal struck with telecom giant Telstra for it to become an retail service provider of Uniti’s Wholesale and Infrastructure (W&I) business is definitely the most significant strategic aspect of the transaction, Simmons adds. It will enable them to target the largest RSP of Australia as part of their FTTP offering and range of value added services, including access control, perimeter wi-fi services and CCTV, he further adds.
The acquisition of Telstra Velocity is the latest in a series of fibre network builders it has acquired, which includes LBNCo and OptiComm. The two FTTPs were acquired within the past 2 years.
About Telstra Velocity – an FTTP network
FTTP is a generic term for any broadband network architecture that uses optical fibre to provide internet access to users. The FTTP network by Telstra, Telstra Velocity is deployed to provide broadband services such as broadband internet, subscription TV, Free-to-AIr TV services and phone through once single connection. It is capable of providing speed of 25Mbps in busy periods (7-11 PM) on its Standard speed tier and it goes up to 80Mbps on its Premier speed tier.
At present, its services are available to 55000+ customers and covers about 68000 premises. To back this acquisition, Uniti Group will be raising $50 million through a fully underwritten institutional placement. About 33.3 million shares will be issued at a share price of $1.50. This represents a 1.4% premium to the closing price of $1.48 on December 15. Moreover, Uniti hopes to raise extra $10 million via a share purchase plan. From December 23, eligible shareholders will be able to purchase up to $30,000 worth of shares.
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