M2 buys CallPlus for $250m

Annette Presley says she is confident M2 will continue to build on the CallPlus brand. Photo / Robert Trathen

Pioneers who built NZ’s third biggest telco and broadband provider sell to Aussie firm.

Two pioneers of the telco sector and founders of the country's third-largest telco and broadband provider, CallPlus, have sold the company for $250 million to Australian business M2.

Annette Presley and Malcolm Dick set up CallPlus in 1996 and it developed a reputation for aggressively challenging the established players.

Since founding CallPlus, Dick has retained a 62 per cent stake in the company with Presley holding a 33.55 per cent stake.

Based on this it was estimated Dick walked away with around $155 million and Presley with just under $84 million, although Presley could not comment on the details of the sale.

She said they had not been planning to sell but M2 was a good opportunity and having worked with the company for a few years already she was confident it would continue to build on the CallPlus brand.

"M2 are a billion-dollar company, and we've already sold one company which is under their wing in Australia - one of Malcolm's billing systems - and so it's sort of a full circle and a really fabulous story," Presley said.

"We started in a tiny office in Parnell with seven people and we've got over 600 staff now and turnover of around $250 million so the whole thing, and the team, we're just so proud of."

As part of the deal, Dick and Presley have signed an agreement not to compete in the sector for the next few years.

M2 management said it was expectingCallPlus to add 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 that the timing was right to bring the business to the next level.

"This is only going to increase our competitiveness," Callander said.

"We set a goal of connecting one in four Kiwi homes a couple of years ago and we've been growing really strongly and organically to get to that point but this takes us to a new level in terms of scale."

M2 said it would continue to operate the business as a stand-alone company and retain the management including Callander, who commented things would be "business as usual" for the telco - which is made up of CallPlus Business, Slingshot, Orcon, Flip and 2talk.

Forsyth Barr analyst Blair Galpin said this was a positive sign for the company but that it would be a few months before M2 began making any changes if it was planning to do so.

M2 is publicly listed on the ASX and has revenues in excess of A$1 billion.

The deal must be approved by the Overseas Investment Office.

See M2's investor presentation outlining the purchase here:

Stoush brewing over Global Mode
CallPlus will turn its attention to a brewing scrap with Spark, MediaWorks, Sky and TVNZ and others over its Global Mode service now that a deal to sell the company has been reached, says chief executive Mark Callander.

The Global Mode service allows customers to use commercial streaming services such as Netflix in the US, which would otherwise be blocked. In a joint statement, the four companies said they had sent the telco and others requests to cease the operation of Global Mode or similar services, which they claimed were breaching copyright.

Callander said yesterday the company would look into the matter.

"We've obviously been a little bit distracted, so again it hasn't been intentionally ignored," he said. "We'll go back and have a look at the letters we've received and we'll respond in due course." The companies gave CallPlus until 5pm tomorrow to make a decision.