Spirit hungry for acquisitions

The listed telco has landed a $9.2m raise as it moves to become a one-stop-shop IT provider.

Spirit Telecom CEO Sol Lukatsky. Source: Supplied.

ASX-listed independent telco Spirit has completed a $9.2m raise, as the Melbourne company continues to rack up acquisitions and expand its focus to becoming a one-stop-shop IT provider.

The company, led by Sol Lukatsky who took over in September 2019, also expanded its debt facility to $10.9m, to be deployed to acquisitions and growth of the company's Spirit X telco digital sales platform.

The plan was first reported in Data Room.

Mr Lukatsky told The Australian Spirit has two potential acquisitions in advanced due diligence and term sheet stage, as it moves from being a pure-play fixed wireless internet provider to also offering IT services the education, aged care, hospital and SMB sectors.

In the past 12 months the company has completed seven acquisitions, and is on the hunt for more opportunities.

"We've got really good value deals coming in almost daily," he said. "We may acquire both or one of those companies at this stage. We've gone pre-emptive to have the funds ready so we can be far more proactive with the balance sheet ready for those transactions and be opportunistic in an environment where asset values have dropped and the multiples around how you price them are certainly far more reasonable than they were three months ago."

The executive added that Spirit had become a leader in combining high-speed internet, IT services, cloud, security and voice products into one service and one bill, particularly servicing SMBs and essential industries.

"This puts us in a strong and defensive position in an uncertain economic environment," he said.

Spirit also announced revenues had grown to $10.3m in Q3 – up 69 per cent from a year earlier, and up 150 per cent on Q3 2019.

The telco made a $740,000 loss for the six months to December. Its revenue was $12m and its underlying earnings before interest, tax, depreciation and amortisation $1.6m.

According to Mr Lukatsky, while Australia's broadband infrastructure has held up relatively well during the COVID-19 crisis, its biggest test is yet to come.

He said the real test will be in coming days when schools across the country begin remote learning.

"YouTube on school holidays is very different to ongoing two-way video across multiple sites, so it's very much a wait and see," he said. "Australia is in good shape I suppose, because we've got good leaders in those organisations and our infrastructure is strong, but the biggest test will be when the network is loaded during that 9-to-5 period. It'll be interesting."