SPIRIT ANNOUNCES ACQUISITION OF LINKONE GROUP & COMPLETES CAPITAL RAISE OF $4.2MILLION

For immediate release 3 April 2019

SPIRIT ANNOUNCES ACQUISITION OF LINKONE GROUP & COMPLETES CAPITAL RAISE OF $4.2MILLION Spirit Telecom to continue its growth and expansion up Australia’s East Coast

Spirit Telecom Ltd (ASX: ST1), Australia’s leading super-fast fixed-wireless Internet provider and leading alternative to the NBN, has just announced its acquisition of LinkOne Group for $5.7m after a successful capital raise of $4.2million. The acquisition will see Spirit continue to expand its wireless network further through Melbourne, Sydney and Brisbane, enabling more businesses across the East Coast to access its high-speed Sky-Speed Internet range.

Highlights

• ●  Acquisition of 100% of the LinkOne Group of Companies (“LinkOne”), including Anttel Communications Group Pty Ltd, LinkOne Pty Ltd, Ignite Broadband Pty Ltd and Wells Research Pty Ltd, for $5.7 million

• ●  Immediate geographic expansion into target markets of Brisbane and Sydney - will allow launch of Spirit’s high speed B2B data services (Sky Speed range).

• ●  Strategically compelling network acquisition, which will allow multi-site B2B data deals to be sold.

• ●   Increases Towers / Points-of-Presence (PoP’s) by c.40%

• ●  Adds 25 reseller partners to allow expanded service distribution of Spirit high speed B2B Services.

• ●  Scales Spirit’s B2B lead generation capabilities across Sydney and Brisbane.

• ●  Access to LinkOne Group’s established network of over 570 clients

• ●  Financially compelling transaction providing ~60% EBITDA uplift

• ●  Implied transaction multiple of circa 5x EV/EBITDA of $1.1 million

• ●  Committed vendors taking 30% in scrip and joining the Spirit team

• ●  The acquisition will be funded via a placement of $4.2 million (at $0.12c) and vendor scrip (at $0.13c), 70%

  escrowed for 12 months.

  Acquisition of LinkOne

  Spirit has entered into an agreement to acquire 100% of LinkOne for upfront consideration of A$5.7 million comprising:

• ●  70% of consideration paid in cash on completion ($4.0 million)

• ●  30% of consideration paid in scrip ($1.7 million issued at $0.13)

  The acquisition of LinkOne is expected to be highly earnings accretive and will add significant value to Spirit. Established in 2008, LinkOne’s network commenced construction in 2015. LinkOne is a wholesale licensed telecommunications carrier operating a predominantly Fixed Wireless network.

  Highlights of the business include:

• ●  570 customers, with business customers accounting for circa 90% of revenue

• ●  44 PoPs, including: 25 in Brisbane, 9 in Sydney and 10 in Melbourne

• ●  Network infrastructure utilises complimentary hardware and co-located Australian data centres

  The acquisition of LinkOne is expected to enhance Spirit’s existing channel partner offering through expanding its presence in Brisbane and Sydney, together with providing a strong platform for ongoing expansion of the Spirit network.

Spirit’s Managing Director, Geoff Neate said, “The acquisition of LinkOne brings to Spirit an instant accretive expansion into Brisbane and Sydney and is geographically complementary in Melbourne. This is an exciting acquisition that has been over 6 months in the making and brings a growing business, managed by a smart team, into Spirit’s stable. This is Spirit’s third network expansion acquisition and will contribute to Spirit’s growth. CEO Todd Maunder will join the Spirit team, focused on network expansion and acquisition and will bring another level of thinking and innovation to Spirit.”

LinkOne CEO, Todd Maunder said, “This is an opportunity to take LinkOne to a new level. The synergies between our respective networks enable an immediate upside for our partners. LinkOne’s developed technology places the combined group at the forefront of wholesale enablement with automated service qualification. I am extremely proud of what the LinkOne team has achieved and we look forward to joining Spirit’s dynamic team.”

The acquisition represents a multiple of circa 5x EV / EBITDA for the 12 months to 31 December 2018. Of the scrip consideration, 70% will be escrowed for 12 months from date of issue.

Capital Raising

To support the acquisition, Spirit has received firm commitments to raise A$4.2 million, before costs, through the issue of 35 million Spirit Telecom Shares at $0.12 per share (“Placement”).

The Placement was completed with the support of new and existing institutional, professional and sophisticated investors. The Placement shares will be issued under Spirit’s capacity under ASX Listing Rule 7.1 and Listing Rule 7.1A.

In addition, Spirit will offer all existing eligible investors the opportunity to subscribe for new shares up to a maximum of 125,000 shares (maximum of A$15,000 per investor) under a Share Purchase Plan (SPP). The SPP will be capped at A$1.0 million with a record date of 2n d April 2019 and subject to Spirit’s discretion to scale back applications.

Spirit expects the LinkOne acquisition to close in late April 2019, subject to the satisfaction of customary closing conditions.

The scrip element of the acquisition will be funded via the issue of approximately 13.1 million Spirit Telecom Shares at $0.13, which represents 30% of the purchase price. These shares will be issued under Spirit’s capacity under Listing Rule 7.1.

ENDS

For all media enquiries regarding Spirit’s appointment or commentary and interviews with Spirit’s Managing Director, Geoff Neate, please contact:

Megan Chambers | megan@moderncurrency.com.au | 0401 470 609

About Spirit

Internet Service Provider, Spirit Telecom Limited (Spirit), is Australia’s leading alternative to the NBN, providing super-fast Internet speeds through the air, ensuring over 7,000 business and residential customers can stream, game, work and connect without disruption.

The ASX listed (ST1) company owns its advanced fixed wireless network, delivering symmetrical speeds of up to 1Gbps for business and 500Mbps to residential consumers - that’s over 16 times quicker than the national average. It’s the Internet that Australia deserves.

Spirit is built on an ethos of being different to be better. Its fixed wireless network is built for speed right to end users in more than 500 buildings around Australia. Additionally, it offers a range of cloud solutions and unified communications services.

Spirit provides industry-leading services and is continually expanding to meet demand, both organically and through acquisitions, which have recently included Voxcom, My Telecom, Phone Names and World Without Wires. With these companies on board, Spirit is prepared for future growth that is powered by its super-fast Internet.

For more information, please visit www.spirit.com.au