PRESS RELEASE: Comms Group to acquire the business and assets of TasmaNet in a highly strategic acquisition adding key network assets, and major corporate and government customers

PRESS RELEASE 16 May 2025

Comms Group to acquire the business and assets of TasmaNet in a highly strategic acquisition, adding key network assets, corporate and government customers and delivering significant expected revenue increase to ~$75m pa with expected underlying annualised EBITDA of $9m to $10m

KEY HIGHLIGHTS

• Comms Group has signed a binding agreement to acquire the business and assets of TasmaNet , a leading provider of premium communication and managed IT services to the Tasmanian Government and businesses in Tasmania.
• Delivers a strong strategic position for the group’s domestic operations in the government and corporate sectors and with key network assets: delivering a portfolio of corporate data services, cross-sell opportunities and the potential of expanding the provision of government and corporate IT and telecommunications (IT&T) services to other Australian states.
o Includes the acquisition of a significant fixed wireless (non-NBN) broadband network in Tasmania.
o Includes a high-capacity fibre optic network through the Hobart CBD together with network facilities in Hobart and Launceston.
o Significant private cloud (Infrastructure as a Service) assets in both Tasmania and the mainland for government and corporate clients.
o Data centre assets (Points of Presence) across Australia to extend and upgrade our existing network capabilities.
o With the planned novation of an NBNCo WBA (Wholesale Broadband Agreement), this elevates the group to become an NBN direct Retail Service Provider paving the way for future national growth, synergy opportunities and lowering the cost for NBN-based services.
o Adds a portfolio of additional cyber security solutions including Firewall-as-a-Service and Threat assessment and prevention capabilities.
• Adds new service offerings in data (internet), managed IT services, Infrastructure as a Service (managed private cloud services) and security services on long term contracts.
• 600+ government & business customers with ~40% revenue derived from 10+ year relationship with the Tasmanian Government.
• Strong financial profile adding proforma annualised revenue of ~$19m (~95% recurring) and annualised EBITDA of ~$4million
• $10m Purchase price made up of $8.5m upfront and $1.5m within 30 days of completion
o Represents ~2.5x annualised EBITDA multiple and is immediately earnings accretive to Comms Group
• Acquisition (and related transaction costs) to be funded by:
o $7.0m equity raising, via a placement and underwritten, non-renounceable entitlement offer; and
o Committed $10.7m debt facility provided by Regal Funds Management with $4.0m to fund the acquisition and additional $6.7m to refinance the existing senior financier (if required)

Comms Group Limited (ASX:CCG) (“Comms Group”) is pleased to announce it has signed a binding business sale agreement (BSA) to acquire the business and assets of TasmaNet along with select assets of the broader Field Solutions Holdings Group Ltd group of entities (TasmaNet). Concurrently, the Company is raising $7.0m via a placement and underwritten non-renounceable entitlement offer.

Peter McGrath, Comms Group CEO and Managing Director said: “This acquisition will be transformational for Comms Group and clearly aligns with our acquisition strategy for expanding our groups domestic service capabilities in addition to increasing our market share into the government and corporate mid-market sectors, adding to our geographical reach and materially improving our financial performance.

We welcome a highly talented TasmaNet team that together with our existing leadership has decades of experience delivering exceptional service to business and corporate customers delivering a range of telecommunications and managed IT services.”

Mr McGrath added that, “Comms Group is delighted to welcome a number of leading institutional funds managers as shareholders following the placement.”

The BSA is subject to limited conditions precedent relating to the receipt of third party consents for the novation of key contracts. Completion is scheduled to occur before the end of May 2025.
 
STRATEGIC RATIONALE

TasmaNet presents a transformational opportunity for Comms Group to materially improve scale – both operationally and financially – underpinned by a long-standing track record of service excellence in the Tasmanian market.

Expands scale and existing service capability
• Expands scale in Comms Group’s existing domestic managed IT and Private Cloud services creating greater opportunity to attract larger corporates.
• Adds significant last-mile data services offerings in Tasmania – opens opportunities to expand in mining and aquaculture.
• Provides further expansion across the eastern seaboard (metro & larger regional) beyond existing operations in VIC, NSW and QLD.
• Ability to leverage improved pricing and market capability from key suppliers due to economies of scale of which the benefits are not yet forecasted.

Leading market position in Tasmania with blue-chip customers
• A favoured local provider with deep local knowledge, relationships and contracts; high barriers to entry for new players given niche market.
• Immediate access to new market segments and regions in Tasmania where Comms Group has little current offering in the market.
• 29 cornerstone Tasmanian Government customers underpin deeply rooted market position (equating to approximately 40% of TasmaNet revenue).
• Over 500 corporate customers with 5+ years average tenure of Top 10 customers.

Strong financial profile
• Proforma FY25 forecast revenue of ~$19m, a 34% increase to the mid-point of forecast FY25 Comms Group standalone revenue guidance with 95%+ recurring revenue.
• 50%+ gross margins (accretive to CCG).
• Incremental annualised EBITDA of ~$4m, a 72% increase on mid-point of FY25 forecast Comms Group standalone EBITDA guidance.

OUTLOOK

The acquisition of TasmaNet further reinforces our focus on increasing market share and geographical presence across the corporate and mid-market sector. The addition of providing services to several Tasmanian government departments further expands Comms Group’s reach, providing upside opportunities given the breadth of the combined service offering.

Over time, the Company is optimistic on the ability to leverage this diversified service offering potentially to other states and to win larger corporate customers nationally.

The Company reaffirms its FY25 standalone guidance for revenue of $55m – $57m and EBITDA of $5m – $6m.

Following the acquisition, we expect combined proforma annualised revenue of ~$75m and annualised underlying EBITDA of ~$9m to $10m for Comms Group.

The Company continues to evaluate potential strategic M&A opportunities, bolstered by the benefits of increased scale.

CAPITAL RAISING

Comms Group today announces an institutional placement and underwritten non-renounceable entitlement offer to raise a total of approximately $7.0m (Equity Raising). The proceeds of the Equity Raising will be used to fund the acquisition and associated costs of the transaction.

The Equity Raising will be conducted at an offer price of $0.050 per new share (Offer Price), which represents a:
• 16.7% discount to the last close price of $0.060;
• 20.2% discount to the 5-day trading VWAP of $0.063; and
• 19.7% discount to the 15-day trading VWAP of $0.062.

The Equity Raising will be conducted via:
• An institutional placement of approximately $4.8m (Placement);
• A non-renounceable entitlement offer of approximately $2.2m (Entitlement Offer) at a ratio of 1 new share for every 9 existing shares held at the record date for the issue, being Wednesday, 21 May 2025 (Record Date)

The Equity Raising will result in the issue of approximately 139.7 million new ordinary shares (New Shares), representing approximately 36% of Comms Group’s existing securities on issue and approximately 26% of Comms Group’s enlarged share capital following completion of the Equity Raising. The New Shares issued under the Equity Raising will rank equally with existing Comms Group’s shares as at their date of issue.

The Entitlement Offer is non-renounceable, and rights (Entitlements) are not transferrable and will not be able to be traded on the ASX or privately. Eligible shareholders who do not take up their Entitlement under the Entitlement Offer in full or part, will not receive any value in respect of those Entitlements not taken up.

 
Institutional Placement

Comms Group has received firm commitments to raise approximately $4.8m under the Placement via the issue of approximately 96.4 million fully paid ordinary shares. All shares under the Placement will be issued at the same price as the New Shares issued under the Entitlement Offer (i.e. $0.05 per New Share). The Placement is within the Company’s placement capacity under ASX Listing Rules 7.1 and 7.1A. New Shares issued under the Placement will not be entitled to participate in the Entitlement Offer.

Entitlement Offer

In addition to the Placement, Comms Group proposes to undertake a fully underwritten non-renounceable entitlement offer to eligible shareholders, on the basis of one (1) new fully paid ordinary share for every nine (9) existing ordinary shares held, at the same Offer Price as the Placement. New Shares issued pursuant to the Entitlement Offer will rank equally with all shares on issue.

The Entitlement Offer will open at 10:00am (Sydney time) on Thursday, 22 May 2025 and close at 5:00pm (Sydney time) on Monday, 2 June 2025. Eligible shareholders will be those with registered addresses in Australia and New Zealand only on the Record Date of 7:00pm (Sydney time) on Wednesday, 21 May 2025.

Eligible shareholders can choose to take up all, part or none of their Entitlement. Eligible shareholders wishing to participate in the Entitlement Offer should carefully read the Offer Booklet and accompanying personalised Entitlement and Acceptance Form which are expected to be despatched on Thursday, 22 May 2025. Copies of the Offer Booklet will be available on the ASX website (www.asx.com.au) upon the Offer Booklet being despatched.

Debt Facility

Comms Group has signed a $10.7m senior debt facility agreement provided by Regal Funds Management, with $4.0m to fund the acquisition and an additional $6.7m to refinance the existing senior financier (if required).

Key terms are outlined in the Investor Presentation lodged with the ASX today.

Indicative Timetable

The timetable below is indicative and subject to change. The Company reserves the right to alter the dates at its discretion and without prior notice, subject to the ASX Listing Rules and the Corporations Act 2001 (Cth). The quotation of New Shares is subject to confirmation from the ASX. All times below are based on Sydney time.

— ENDS —

FOR MORE INFORMATION
Peter McGrath Matthew Beale
Chief Executive Officer Chief Financial Officer
[email protected]
ABOUT COMMS GROUP

We enhance business agility through innovative cloud-based communications and secure modern workplace solutions.

Comms Group provides a full range of advanced communications, collaboration and IT solutions from the Cloud. We specialise in the delivery of secure modern workplace IT solutions, managed services, cloud hosting, cloud communications, CPaaS and UCaaS, delivering reliable and scalable technology solutions to empower businesses.