SGX-Catalist listed DeClout Limited (“DeClout” or the “Company”, and together with its subsidiaries, the “Group”) has signed a deal with Pacnet Internet (S) Pte Ltd (“Pacnet Internet Singapore”), a subsidiary of Telstra Corporation Limited (“Telstra”), Australia’s leading telecommunications company, to acquire certain Internet Service Provider (“ISP”) assets and business in Singapore and Thailand from Pacnet Internet Singapore (the “Proposed Acquisition”).
Under the terms of the Proposed Acquisition, DeClout’s subsidiary, Acclivis Technologies and Solutions Pte. Ltd (“Acclivis”) will, through its subsidiary, OSINet Communications Pte Ltd (“OSINet”), acquire certain assets (including “Pacific Internet” trade marks in Singapore) of the ISP business carried on by Pacnet Internet Singapore for US$2.3 million (the “Singapore Transaction”). At the same time, DeClout’s indirect subsidiary, Acclivis Technologies (Thailand) Limited, will acquire the entire share capital of Pacnet Internet Thailand Limited (“Pacnet Internet Thailand”) for US$2.1 million. Both the Singapore and Thailand businesses are focused on providing ISP services to small and medium sized businesses.
Completion of the Singapore Transaction is subject to regulatory approval from the Infocomm Development Authority of Singapore.
Upon the completion of the Proposed Acquisition, the acquired assets will be merged with Acclivis’ existing ISP business, OSINet, and together, be rebranded as Pacific Internet, allowing Acclivis to broaden its offerings and achieve further economies of scale in the ISP segment.
The Proposed Acquisition is also expected to be earnings accretive and to bring in more than 3,000 customers. Pacnet Internet Singapore and Pacnet Internet Thailand posted approximately S$20 million in combined revenue (based on unaudited management accounts) for the financial year ended 31 December 2014.
The Proposed Acquisition enables Acclivis to offer a onestop regional ICT service to our enterprise customers and give them more choices in deploying the best latency and network through our enhanced internet connectivity services in the region. The ISP segment of our business has been a strong growth area, and this acquisition will further enhance our recurring revenue stream. Our enlarged presence and capabilities will also help Acclivis expand into new markets, further driving our top-line growth and profitability.
The Proposed Acquisition will also allow Acclivis to become a licensed operator in Thailand with the relevant ISP and telecommunications business licenses to expand its cloud business there.
The Group believes that these licences will enable Acclivis and other DeClout business units to offer newservices in Thailand in the B2B (business-to-business) and B2C (business-to-consumer) space and beyond.
This deal is another milestone for us as it will allow DeClout to extend its regional presence in Southeast Asia and create more opportunities to upsell and cross-sell our Cloud, Technology, Managed Services and other telecommunications products of the Group to a broader customer base. Given the customer reach of the two businesses, we are optimistic of their positive contributions to the Group’s financial performance in the financial year ending 31 December 2016.
The demand for ICT services in the region remains robust. According to projections by Gartner Inc2 , enterprise Information Technology (“IT”) spending in Southeast Asia will total US$62 billion by 2018. The Southeast Asia region comprises 11 countries of which Singapore, Malaysia, Indonesia and Thailand spend the most on IT and account for roughly 80 percent of the IT spending in the region. These four countries are estimated to spend a combined US$52 billion on IT in 2015, with annual growth of six percent.