Telstra Acquires Damovo Australia for $64.3 Million

Strategic Insights -

Telstra Corp Ltd has signed an agreement to acquire business solutions provider Damovo Australia for an enterprise value of $A64.3 million ($US44.31 million). This acquisition is part of Telstra's strategy to deliver growth by offering business customers the full range of telecommunications and IT services through a single provider. The deal is expected to be completed in the coming weeks, and Telstra's business and government managing director Christine Holgate believes it will give the company the ability to package IP CPE with carriage and applications.

Key Takeaways:

  • Telstra will acquire Damovo Australia for an enterprise value of $A64.3 million ($US44.31 million), providing operational control, earnings per share (EPS) accretive, and cash flow positive in year two.
  • The acquisition will enable Telstra to offer business customers the full range of telecommunications and IT services through a single provider, aligning with the company's strategy for growth.
  • Damovo is a leading provider of Customer Premises Equipment (CPE) equipment and maintenance services, supported by a well-respected national dealer network.
  • The acquisition price represents an Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) multiple of approximately five times Damovo's latest management forecasts.
  • The transaction is expected to be completed in the coming weeks, and Telstra believes it will have a strong platform to capitalize on the trend of business upgrading CPE capability in 2005.
  • Analysts Frost & Sullivan expect IP PABX to make up 50% of the CPE market by 2007, up from the current 35%.

Statistics:

  • Enterprise value of the acquisition: $A64.3 million ($US44.31 million)
  • Expected completion time of the transaction: the coming weeks
  • EBITDA multiple of the acquisition price: approximately five times Damovo's latest management forecasts
  • Current percentage of the CPE market held by IP PABX: 35%
  • Forecasted percentage of the CPE market to be held by IP PABX by 2007: 50%

Sources:

  • Sydney Morning Herald, "Telstra to buy Damovo for $64.3m"
  • Telstra Corp Ltd, "Telstra to acquire Damovo Australia"
  • Asia Pulse, "Telstra Buys Damovo Australia for $US44.31 Million"