Swoop sells Voicehub to Pivotel for AU$9 million in strategic decision

Australian telecommunications company Swoop Holdings has announced the sale of its wholesale voice business, Voicehub, to Pivotel for AU$9 million. The divestment is part of a strategic realignment aimed at refocusing on core markets and customers. The transaction, entirely in cash, values Voicehub at 5.2 times and 4.5 times its FY23 and FY24 normalised EBITDA respectively.

The decision to sell the wholesale voice call termination business follows a comprehensive strategic review of Swoop's ongoing operations. Voicehub, which was acquired by Swoop in October 2021 for AU$6 million, will now be under the stewardship of Pivotel. Swoop had initially purchased Voicehub through a mix of cash and shares, comprising AU$4 million in cash and AU$2 million in Swoop shares.

The proceeds from the sale will be directed towards stimulating growth in Swoop's core residential, SMB, data, and voice sectors. Furthermore, as part of the transaction, Swoop has secured a long-term agreement with Pivotel. This contract ensures that the competitive wholesale rates and cost structure of the business will be maintained under the new ownership.

Alex West, Swoop's Chief Executive Officer, expressed optimism about the decision. "As we close out FY24, we continue to see strong organic growth in our core residential and SMB-focused business units, particularly in Fixed Wireless Broadband, NBN, Mobile and Voice," he said. West acknowledged the growth achieved since the initial acquisition of Voicehub but noted that the divestment was necessary to concentrate on key markets and customer bases.

The AU$9 million generated from the divestment will provide Swoop with greater balance sheet flexibility. The funds will be utilised to bolster growth in residential infrastructure, mobile, and NBN sales engines, thereby enhancing the company’s operating cash position for FY25.

West added, "We are pleased this process has reached a successful outcome; our customers and Voicehub staff will find a good home with the Pivotel team. This sets the business up well for FY25 and provides additional firepower for continued organic growth in the year ahead."

Swoop retained Bonitz Advisory as its mergers and acquisitions adviser for this transaction, with Maddocks serving as the legal adviser and PKF handling tax advisory matters. The acquisition is expected to reach financial completion by 1 July 2024, contingent upon customary conditions including consents to change of control and the agreement of Voicehub employees to new employment terms satisfactory to the Purchaser.

This divestment comes against a backdrop of continued growth for Swoop. Since its listing in May 2021, Swoop has acquired eight businesses including Speedweb, Countrytell, and Moose Mobile, among others. The company's mid-year financial results for FY2024 showed a 17% increase in revenue year-on-year, reaching AU$43.5 million, with underlying EBITDA rising 13% to AU$8.2 million. Subscriber numbers also saw a significant organic increase of 16%, growing from 111,176 to 161,335.

In recognition of its sustained growth, Swoop has been named one of the Australian Financial Review's Digital Transformation Leaders for 2023, earning a special distinction as "One to Watch." The company was also a finalist in the 2023 Australian Growth Company Awards.