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5GN takes over Melbourne Data Centre for $5.7m

03 Apr 2019

In a move it says is ‘another completion of the infrastructure puzzle’, 5G Networks (5GN) has announced the acquisition of Melbourne Data Centre (MDC).

As the name would suggest, the facility is located in the heart of Melbourne, with the purchase price coming in at $5.7 million made of $1 million cash on completion and issuing of $1.75 million of shares.

In the first year the vendors will receive a total of $550,000 paid in quarterly payments. The second-year payment is $1.250m and final year the vendors will receive $1.15m. The vendors have contracted 5GN to supply data centre services over the next 3 years valued at $1.6m.

MDC has been operating for seven years and was sold by private vendors who have agreed to accept $1.75m in shares as part of the purchase price (5 day VWAP).

5GN expects the infrastructure investment will open up several opportunities for revenue growth, cost savings and operational synergies – and for good reason. The company is currently spending around $3.8 million per annum in data centre services from third party providers.

As such, 5GN expects $600,000 of annualised synergies to be realised within the first three months.

“We have completed another piece of the infrastructure puzzle today. 5GN can now offer direct and managed access from our own data centre all the way through to Cloud and Managed Network services,” says 5GN managing director Joe Demase.

Currently, MDC is operating at 40% capacity. 5GN is confident more effective data centre utilisation will be achieved through meeting existing customer demand to drive profitable revenue growth, underpinned by the considerable EBITDA returns generated by data centre services.

The facility includes capacity for 330 racks with Tier 4 N+2 design, ISO accreditation and 24/7 onsite security surveillance. The 4.5MW of power is supported by full redundancy with the potential to operate at 100% capacity.

Demase says 5GN currently connects a significant proportion of its own fibre and wireless network in this data centre’s location.

“Through this growing infrastructure footprint we can manage the digital experience so that our services are easy to use and seamless for customers, all locally managed with a single point of contact through our national 24/7 service centres. We will now explore wholesaling the growing number of infrastructure products we can offer,” concludes Demase.

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