CallPlus sold to Aussie telco M2

CallPlus chief Mark Callander. Photo: Janna Dixon.

CallPlus, New Zealand's third largest telco and broadband provider, has been bought by Australian listed telco M2 for $250 million.

The deal is being described as a new era for the Kiwi telco and comes after significant growth in the business, including its purchase of Orcon last year. M2 management said it was expecting the acquisition of the company to bring in revenue of more than $250 million, and earnings before interest, taxation, depreciation and amortisation of $45 million in the 2016 financial year.

CallPlus chief executive Mark Callander said the timing was right to bring the business to the next level.

"It is a very exciting time in the life of CallPlus and signals a new era for the company," Callander said. "With M2's wealth of experience and expertise, CallPlus is now in a perfect position to continue to grow as we focus on our drive of connecting 1 in 4 Kiwi homes."

Callander said things would be business as usual at the firm, which is made up of CallPlus Business, Slingshot, Orcon, Flip and 2talk, and said it would be continuing to operate as a self-contained business.

M2's chief executive Geoff Horth said he was happy with the acquisition.

"We are thrilled to bring CallPlus into the M2 fold, at a time when it is delivering strong growth and profitability," Horth said. "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."

M2 is an S&P/ASX200 company that provides "traditional and next generation telecommunications products", as well as electricity, gas, and insurance with revenues in excess of AUD$1 billion.

Shares of M2 climbed 6.2 percent to A$11.11 on the ASX and have soared 100 percent in the past 12 months. The stock is rated a 'buy' based on the consensus of 14 analysts polled by Reuters.

Horth said the existing management team including Callander would continue to lead the business.

CallPlus was set up in 1996 by Annette Presley and Malcolm Dick - who had since retained a majority stake in the company. CallPlus is currently embroiled in a legal fight with entertainment and television players Spark, MediaWorks, Sky and TVNZ as well as a number of smaller businesses that have demanded the company stop offering global mode, which allows its customers to stream overseas commercial streaming services such as Netflix in the US.

Last week Callander said he had seen the media statement about the letter that had been sent.

"Once we have seen the letter and reviewed it, we will be in a position to make a statement," he said. "As we've said before, we're confident that Global Mode is perfectly legal."

The company has until Wednesday at 5pm to make a decision.

The acquisition is expected to be completed by June 30 this year.

See M2's investor presentation outlining the purchase here:

with BusinessDesk