New Zealand Telecom is to ramp up its activities in the burgeoning market for cloud services following a $96.5 million ($82.5 million) takeover of infrastructure and data center specialist Revera.
The New Zealand telecoms incumbent said it would fund the acquisition through cash and existing borrowing facilities and expects the deal to close in May.
It will continue to run Revera (Auckland, New Zealand) as a standalone business, providing customers of Gen-i –New Zealand Telecom’s ICT services division – with access to additional cloud capabilities and data center capacity.
“As previously announced, Telecom is refining its business strategy to become a future-oriented, competitive provider of communication, entertainment and IT services delivered over tis networks and the cloud,” said Simon Moutter, the chief executive of New Zealand Telecom (Wellington, New Zealand).
“This acquisition adds a respected brand that deepens our IT services portfolio for business customers, particularly with regards to cloud services,” he added. “Both Gen-i and Revera will be better positioned to respond to evolving customer needs in the areas of big data and cloud computing.”
Revera reported revenues of NZ$50 million and earnings before interest, taxation, depreciation and amortization (EBITDA) of NZ$13 million last financial year, but expects to generate NZ$15 million in EBITDA this financial year.
It currently employs 140 people and operates five data centers – one in each of Auckland, Christchurh and Hamilton, and two in Wellington.
By comparison, New Zealand Telecom made NZ$4.58 billion in revenue and NZ1.08 billion in EBITDA in the 2012 financial year.
Explaining the rationale behind the move, New Zealand Telecom said the transaction would have revenue, cost and capital synergies.
The operator claims there is an industry-wide shortage of premium-grade data centers and says that cloud services are a key strategic growth market.
“The acquisition matches the future focus of Gen-i, giving us more data center capacity, more virtualization expertise and more horsepower to support clients,” said Tim Miles, the chief executive of Gen-i. “This is one of a number of steps being taken by Gen-i towards becoming more agile, cost-effective and responsive.”