IINET has almost maxed out its debt facility but I'm not concerned....the current cash generation of the business is in a sweetspot with CAPX in relative wind down coming into NBN while IINET is still extracting significant synergies from Netspace and AAPT acquisitions....
TransAct is a very interesting bundle of assets....I too used to be a fibre customer and didn't know how lucky I was when in Canberra...
Operationally, difficult to assess the investment metrics of TransAct
Did anyone notice TransAct seems to make very little profit.....EBITA 17 million V CapX for last year of 15 million.....no wonder the owners wanted to find someone with deep pockets....it was almost a break even enterprise last year just on that snapshot
How about the information about, I think, $280 million invested in the assets over years....V purchase price of 60 million
What remarkable is that 30 mill of revenues comes from a major data centre....data centres are meant to be the modern money tree....but obviously not for TransAct.
As with all IINET acquistions, the customer base is the most valuable asset.....TPG is better at gaining customers but IINET is much better at monetizing them and keeping them....If anyone can do this acquisition well, its IINET....
So in summary: IINET has bought an asset rich, net profitless company with extremely valuable bus/gov relationships and a strong existing customer base
Dare I venture to say: with TransActs strong but profitless assets and IINET's market leading intangible assets and margins........this could be the start of something big(ger)
IIN Price at posting:
$2.55 Sentiment: None Disclosure: Held
