Team Talk to buy BayCity Communications

TeamTalk shareholders to approve purchase of rural telco for up to $42 million

TeamTalk has announced it plans to acquire Timaru-based rural telecommunications provider BayCity Communications for up to $42 million.

It would pay $31m up front in cash and shares and up to a further $11m depending on BayCity's subsequent performance over two years.

The deal is subject to approval by TeamTalk shareholders who will be asked to vote on the acquisition next month.

The acquisition is a large one for TeamTalk, which is valued on the NZX at $61.3m. Its shares were trading down 1 cent at $2.61 shortly after the announcement.

BayCity posted revenues of $25.4m in the year to June when it had earnings before interest, tax, depreciation and amortisation of $5.8m.

TeamTalk chief executive David Ware says if the sale goes ahead BayCity will continue to operate from Timaru. "

3 Comments

Anonymous

1

This feels like another a good deal by Ware and his team. CityLink took a while to fire the market's imagination but it now earns well over double what it did when TeamTalk bought it. I wonder if it will take the market that long to work to work out that Farmside is a little gem hiding down there in Timaru?

Anonymous

2

6-7x earnings? For a mediocre satellite based product? Just before RBI gets moving? And as CityLink starts to feel the pinch from UFB competition in its core market? Risky deal.

Anonymous

3

Shouldn't analogue mobile radio be dead? Wasn't push to talk over cellular going to kill it? Or was it Kordia's digital network?

These guys seem to do quite well with legacy technology iand betting against the big guys, it will be interesting to see how they go here.

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