Inabox direct acquisition pays off for 5G Networks already

5G Networks' acquisition of Inabox's direct business is already starting to pay off, securing more than $5 million in new revenue in just three months.

The broadband network operator paid $5.7 million to buy the direct business, which is comprised of managed cloud hosting firm Hostworks and IT cloud services provider Anittel, from Inabox in August last year. At the time, the direct business was generating $45 million in revenue per year, but was overall dragging down Inabox's profitability.

In a business update posted to the ASX, 5G Networks said it won "several significant deals" since acquiring the direct business, delivering more than $5 million in new incremental revenue.

The wins were underpinned by sales for annuity-based revenues, and the proposition of access to 5G Networks' high-speed network for large corporate customers, the company said.

5G Networks also stated that it was operating more efficiently thanks to leveraging the nationwide integration of enterprise software and accounting systems, which provided significant cost savings. The new capability will import management and analysis of customer data, providing more opportunities for cross and up-selling.

5G Networks managing director Joe Demase said the company has been focusing on integrating Anittel and Hostworks since the acquisition was completed in October.

"Importantly, several projects which deliver this strategic outcome have now been successfully completed. This integration builds on our strong foundation for future growth by enabling the aggressive pursuit of cloud, digital and data networking," he added.

5G Networks said when the acquisition was announced that it expects the direct business to eventually generate $43 million in revenue.

Inabox bought Hostworks for $7 million in February 2017 but just nine months later, the wholesale telco provider revealed that the revenues Hostworks generated were significantly below expectations. As for Anittel, Inabox bought it for close to $10 million back in November 2014, allowing the company to expand into IT and cloud services.

Inabox eventually sold its remaining indirect business to MNF Group for $34.5 million, which was approved by shareholders in December.