M2 acquires third-largest Kiwi ISP for $245 million

Telecommunications provider M2 Group will acquire New Zealand’s third biggest ISP, CallPlus Group, for A$245 million.

The acquisition includes voice-over-IP (VoIP) solutions provider 2Talk and CallPlus subsidiaries CallPlus Business, Slingshot, Orcon and Flip.

M2 expects the acquisition to add over NZ$250 million in revenue and NZ$45 million in earnings before interest, tax, depreciation and amortisation in the next financial year.

M2 CEO Geoff Horth said CallPlus would continue to operate under its current management team and focus on a New Zealand-only business model.

“We have had a long association with CallPlus, as a wholesale supplier to our existing New Zealand operation and recognise many similarities between our businesses in terms of target customers, team culture and a shared philosophy of disrupting and challenging the status quo in our respective markets,” Horth said in a statement.

CallPlus has over 400,000 customers across consumer, business and wholesale markets in New Zealand.

Its annual revenue was up 4 percent in FY2014 to NZ$244 million, with earnings before interest, tax, depreciation and amortisation up 26 percent to NZ$24 million.

In 2014, CallPlus bought rival ISP Orcon for an estimated NZ$37 million, boosting its broadband market share to 18 percent.

M2, which includes Dodo, Commander, iPrimus and Engin, increased its revenue in excess of $1 billion in FY2014, and grew its net profit after tax by 53 percent to $67.1 million.

The acquisition is expected to be completed by 30 June 2015.