Superloop buys BigAir to create NBN rival for enterprises

A major deal between publicly listed network providers BigAir and Superloop is set to open up a new front in the battle to connect enterprises to super-fast internet.

BigAir, an ASX-listed provider of wireless and IT services, is being acquired by Superloop, the dark fibre company founded in 2014 when serial entrepreneur Bevan Slattery spun off the network infrastructure assets of his virtual connection venture, Megaport. Slattery is also the founder of NextDC and Pipe Networks.

The combination, which remains subject to numerous approvals, will create an $86 million-revenue ICT company spanning a diverse range of services, everything from student wireless to data centre integration to pan-Asian interconnnection services.

BigAir is already well entrenched in major corporate customers as a wireless provider. The deal would allow BigAir to swap out its current backhaul provider while also giving Superloop a fibre beachhead into 60-100 "key enterprise buildings".

Converging the two networks will bring estimated cost savings of $4 million, while also creating "a low-cost access alternative for Gigabit-plus speeds", according to an investor presentation.

"Leveraging Superloop’s fibre assets and BigAir’s existing wireless network and capabilities, we will deliver wholesale providers a high-speed NBN alternative in outer metro and regional Australia."

Superloop will also be able to go after "a greater share of wallet" in new industry verticals, such as education, health, aged care and construction.

The proposed acquisition is expected to close in December 2016. The parties have two alternative offers for BigAir shareholders: either Superloop shares, or a combination of cash and shares. The maximum cash consideration is $95 million.

Superloop has appointed Macquarie Capital as its financial adviser and Gilbert & Tobin as its legal advisor, while TMT Partners advised BigAir.

Managed services

BigAir's service catalogue span three key segments: a campus solutions division that supplies wi-fi and ethernet to 200 sites, including student accommodation; network services, including a national MPLS network and fixed wireless; and IT services, created through its 2014 acquisitions of Anittel and Sydney-based MSP Oriel. BigAir has since acquired Applaud IT and Cyberhound.

After the Superloop transaction, BigAir's managed services business will be run as a separate operating organisation under the leadership of current BigAir chief executive Jason Ashton, focusing on the medium to large enterprise space. The MSP will leverage Superloop and BigAir's infrastructure advantage as a wholesale provider.

BigAir came No.27 in the 2015 CRN Fast50, with revenue growth of 50.09 percent to $62 million.

That performance was not a one-off: the company has been on a consistent growth path over the past five years, from revenue of $15.8 million in 2011 to $79.7 million in 2016 – a compound annual growth rate of 39 percent.

Underlying earnings and profit have also boasted CAGR of more than 30 percent over five years.

BigAir chief executive Jason Ashton said: “I am delighted to be able to bring this proposal to BigAir shareholders. The benefit that Superloop’s experience, capabilities and fibre infrastructure brings to the BigAir offering are transformational, and I am excited to work together with Bevan as part of Superloop.”

The deal would represent Superloop's biggest transaction so far, having already acquired some smaller Australian ISPs – first Brisbane-based network services wholesaler APEX Networks in October 2015 followed swiftly by Cinenet Systems, an Adelaide-based provider of high-speed networks specifically aimed at digital media studios.

Superloop CEO Bevan Slattery said: “The acquisition of BigAir will allow us to leverage our fibre network plus provide us with new wireless capabilities to deliver low cost gigabit connectivity.”

In the presentation to shareholders, Superloop also outlined the key risks presented by the transaction, including its relatively young age and "limited track record"; the multi-jurisdictional risk of operating across Australia, Singapore and Hong Kong; and the potential for outages.