Vonex signs multi-year agreement with telco giant Orange

By Jonathan Jackson. Published at Feb 5, 2021, in Technology

Vonex Limited (ASX:VN8) announced today that it has signed a multi-year wholesale agreement with Orange Business Services, the global enterprise division of the $26.2BN capped Orange Group (EPA: ORA).

Vonex is a full service, award-winning telecommunications service provider selling mobile, internet, traditional fixed lines, and hosted PBX and VoIP services - predominantly to the SME customer under the Vonex brand

The agreement, signed through wholly-owned subsidiary 2SG Wholesale, will see Vonex supply Orange with business-grade Mobile Broadband services throughout Australia.

This is the second major milestone for the company this week, following the completion of the Nextel acquisition, which gives Vonex additional revenue streams and brings new areas of expertise to the company, effectively expanding Vonex’s already impressive diversified product offering.

As we have previously reported, in fiscal 2020, Nextel generated EBITDA of approximately $450,000 on revenue of approximately $2 million, with infrastructure and specialised projects being a key driver.

Read: Vonex seals the deal on earnings accretive Nextel acquisition

Both the Nextel acquisition and the Orange agreement play into Vonex's commitment to continually improve user experience and deliver value for its SME and wholesale customers.

It is clear now that this focus, is translating to new customer wins.

Through the Orange agreement, Vonex plans to support the Australian launch of new products for Orange Business Services' enterprise customers.

With 3,000 multinational clients, Orange Business Services delivers enterprise connectivity to customers in a range of industries such as automotive, mining, oil & gas and public sectors, including Internet of Things (IoT) connectivity for transport, logistics and smart cities.

“We are delighted to partner with Orange to support Orange Business Services’ expansion plans in Australia,” Vonex MD Matt Fahey said.

“Signing this agreement is testament to the growth and maturity of our offer to small, medium and enterprise customers, as we are seeing strong growth across both existing and newly-launched products.”

For Orange, the agreement is a step forward in providing Australian businesses the best in digital services.

“With this agreement, Orange will offer enterprises the ability to combine NBN connectivity with wireless broadband services through one provider only. This will bring great simplicity as well as strong; fast and stable connection which were once reserved for MPLS and largest companies,” Kevin Griffen, Orange Managing Director, Australasia said.

"With this agreement, enterprises can reap the benefits of SD-WAN, NBN ubiquity, and business grade mobile broadband - providing a resilient networking platform on which to drive their digitalisation programs.”

Agreement Terms

The Agreement between Vonex and Orange Business Services is for an initial term of three years. The Agreement shall automatically renew for successive periods of 12 months thereafter unless either party provides notice of its intention not to renew the Agreement by giving not less than 6 months’ notice prior to the expiry of the current term. There is no exclusivity binding the Parties to the Agreement.

Benefit to Business and Revenue

The Agreement is to supply Orange Business Services with business-grade mobile broadband services throughout Australia. The addition of Orange Business Services brings the number of 2SG Wholesale customers who purchase mobile broadband services to 82 in total. There are no minimum purchase orders pursuant to the Agreement, as such Vonex is unable to provide guidance on the potential contribution to the Company’s revenue.

Could Vonex be 2021’s dark horse?

Vonex is a full service, award-winning telecommunications service provider selling mobile, internet, traditional fixed lines, and hosted PBX and VoIP services - predominately to SM customers under the Vonex brand.

It has been around for some time now, however seems to have flown under investors’ radars.

When you look at peer valuations, Vonex could be one to watch this year as it continues a seemingly aggressive approach to build on its already solid foundations through acquisitions such as 2SG and Nextel and agreements such as the one with Orange.

  • Spirit Telecom (ASX: ST1): $216M
  • Over The Wire Holdings (ASX: OTW): $225 and ...
  • Uniti Group (ASX: UWL): $1.24BN - yes, now valued at over $1BN.

All are trading at many multiples of VN8, currently at $42M.

Read: VN8’s Latest Acquisition Boosts Group ARR to Over $18M

The Nextel acquisition increased the company’s annualised recurring revenue (ARR), with group ARR increasing to more than $18 million.

This gives it a strong revenue profile for 2021.

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