Inabox to help partners acquire "struggling" rivals

While TPG and Vocus seal acquisitions worth hundreds of millions, Inabox wants to give smaller channel players a chance to expand via M&A too.

The telco and IT provider will assist “selected” clients in its wholesale business to snap up other retail service providers.

Inabox wants to swoop on “struggling” rivals, stating competitive pressures are restricting growth for smaller service provider partners in its wholesale business.

The company has more than 400 resellers, with its wholesale operations including the iVox VoiP business, Neural Networks for cloud, data and communications, and white labelled Telcoinabox operation. It also has a large direct-to-customer presence following the acquisition of Anittel.

Inabox also wants more acquisitions under its own belt, stating it will try to buy businesses or customer bases of smaller wholesale rivals. Many of those rivals are struggling to “remain viable given their small scale”, Inabox announced this month to the ASX.

Exactly how many and how large the acquisitions that Inabox will make remains to be seen. It has already snapped up various businesses, the latest being Anittel for a total of $6.9 million in cash and shares. That company had seen several years of losses, but in May it became profitable in terms of earnings before interest, tax, depreciation and amortisation.

Another conquest was Neural Networks Data Services, which Inabox bought in July 2014 for $350,000. It was acquired to grow Inabox’s wholesale cloud and VoiP products.

Inabox also said it has benefited from the failure of rival businesses iTelecom Wholesale and one of the entities in the Wireline group of companies. Former customers of both businesses have moved to Inabox for wholesale supply, while Inabox also paid $200,000 in July to the business formerly trading as Wireline Wholesale for 2000 services-in-operation contracts.

In terms of revenue at least, this strategy seems to be paying off. Inabox revenue climbed 37 percent to $64.3 million in the 2015 financial year. The acquisitions pushed Inabox into the red though, with it reporting a $351,000 loss compared to a $1.1 million profit the year before.