Vonex Limited offers $31 million to buy MNF Group’s Direct Business

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On Monday morning (7th June 2021), business internet plans company Vonex Limited (ASX:VN8) emerged from a trading halt and informed the market of a strategic development in progress of the negotiation of a non-binding, conditional term sheet with MNF Group Limited for buying of part of MNF’s Direct Business for $31 million.

Through this acquisition, Vonex Limited could get its hands on over 100 new Aussie telecommunication channel partners and more than 5000 new business customers, if this deal gets through.

Both companies, which are listed on the ASX, communicated to their respective shareholders on 7th June about the conditional term sheet. The Direct Business of MNF Group sells mobile services, cloud phone and internet services to SMEs as well as residential customers across Australia. MNF Group says it also has a dedicated video and audio conferencing business. 

Details of Vonex acquiring MNF’s Direct Business

Through the proposed acquisition, Vonex will be able to materially expand its footprint in Australia’s small and medium sized enterprises and residential customers. The company might migrate about 5250 new business customers to the platform.

If the proposed deal reaches completion, it will also strengthen the channel partner network of Vonex, bringing over 100 channel partners via which the telecommunications company could reach out to new customers.

MNF Group Limited said that the deal is in line with its business strategy to amplify its position, increase recurring revenue streams and focus on boosting the MNF wholesale business – Symbio.

Though the customers to be migrated to Vonex through this proposed deal are predominantly served by MyNetFone (MNF Group’s legacy brand), the brand itself isn’t part of the deal. MNF will be retaining its government and enterprise clients.

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More on the acquisition

More importantly (for MNF, at least), the term sheet will include a requirement for both the parties to enter into an “exclusive Symbio wholesale supply agreement” for phone numbers and minutes with a 5-year contract term. 

This wholesale supply agreement implies that MNF will be retaining more than $3 million per year in existing revenue for the domestic wholesale business.

Assuming all conditions of the proposed deal are met, MNF Group Limited expects that the asset sale agreement to be executed by July 2021. 

Rene Sugo, MNF Group CEO said “the divestment of these direct businesses is in line with our strategy to simplify MNF’s business and drive growth in our CPaaS [communication platform-as-a-service] and UCaaS [unified communication-as-a-service] voice services, which are in high demand.” 

Funds from the sale will be reinvested into MNF’s growing wholesale business and its offshore expansion, Sugo added.

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