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Virtual telco Inabox prepares for IPO

  • Published May 29, 2013 9:26AM UTC
  • Publisher Wholesale Investor
  • Categories Company Updates

Source: The Australian Financial Review

By: JOHN MCDULING

“Virtual telco” Inabox Group has appointed well known ad man Siimon Reynolds as its new chairman as it prepares for an initial public offering that will value the business at $16.2 million.

Seeking to capitalise on the boom for small cap telco stocks, the company on Monday offered about 2.42 million shares on the ASX at $1.20 to raise $2.9 million. Shaw Stockbroking is handling the raising. Shares are expected to debut on June 26.

The company is a wholesale telecommunications aggregator, which buys capacity from Telstra and on-sells it to over 200 direct resellers.

It also white-labels its proprietary, back-end billing and support systems to its clients, which include offshore telcos with limited domestic operations and dealer groups who have moved into direct re-selling. The company is currently in discussions with an undisclosed ASX-listed electricity provider about expansion into telecommunications services.

The company’s competitors include MyNetFone and M2 Telecommunications.

“We make money in a number of ways, we make a margin on the network, we buy capacity off the carriers and re-sell it, and we also charge them [clients] for the billing, the tech support and the customer care,” chief executive and managing director Damian Kay explained.

BIG OPPORTUNITIES TO EXPLORE

Mr Reynolds, the founder of Photon Group, splits his time between Los Angeles and Sydney. He said there was a big opportunity for the company to provide virtual telco services to other consumer brands seeking to expand into the sector.

“They are larger companies with a trusted clientele, with a customer base that would believe in a telephone offering,” he said. “The love of Telstra and Optus is not so high to keep you there. These guys have got a much stronger relationship with customers than Telstra or Optus.”

Inabox generated earnings before interest and tax of $1.2 million last year, on revenue of $45.7 million. It generated EBIT of $1.4 million in the first half of 2013 alone.

The raising will value the business at 8 times estimated 2013 net profit after tax.

The proceeds will fund the company’s acquisition of privately held, voice over internet protocol aggregator iVox.

MORE ACQUISITIONS POSSIBLE

Mr Kay said the company was well placed to pursue more acquisitions, particularly those that are now too small to move the dial for its rivals, such as M2 Telecommunications, which is capitalised at nearly $1 billion.

He described the national broadband network as a “massive opportunity” for the company as it will eliminate the infrastructure advantages the likes of iiNet and TPG Telecom enjoy.

There has been widespread industry speculation that Australia Post could soon move into direct telecoms re-selling. In the United Kingdom, supermarket chain Tesco has made such a move.

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