ASX-listed NetComm Wireless – one of Australia’s most successful telecoms manufacturers – is to be sold to NASDAQ listed Casa Systems in an all-cash deal valuing the company at around $161 million, subject to shareholder approval.
The price of $1.10 per share represents a 52.8 percent premium on NetComm’s closing price on 20 February.
The announcement follows NetComm’s January 30 announcement of 5G fixed wireless technology where the terminal equipment can be installed by the customer, reducing the cost of connecting end-users to 5G fixed wireless.
Under the deal NetComm would become a wholly-owned subsidiary of Casa Systems, and NetComm said there would be no immediate change to the way it operates.
The deal has been unanimously recommended by NetComm directors but requires approval from shareholders and the Foreign Investment Review Board. It is expected to be completed in June. NetComm said it was not subject to finance or due diligence conditions.
NetComm chairman Justin Milne said NetComm’s customers and staff would both benefit; customers from the resultant increase in scale and a broader product suite and service capability.
“We believe there will be excellent opportunities for our engineers to be engaged with Casa Systems’ pioneering advanced ultra-broadband 5G solutions for mobile, cable, fixed and converged service providers,” he said.
Casa Systems
Casa Systems was founded in 2003 and has revenue of approximately $US300 million and more than 700 employees across 11 countries. It describes itself as “pioneering advanced ultra-broadband 5G solutions for mobile, cable, fixed and converged service providers.”
However it provides much more than the radio component of networks. According to its website, at the heart of its ultra-broadband solutions is its Axyom software platform, billed as “a common set of cloud native microservices that allow Casa to deliver high performance, flexibility, robustness and scale as we utilise our market leading routing, session / subscriber management, RF management and security software across all our virtualised network functions.”
Casa claims to have its technology commercially deployed in over 70 countries and to have more than 450 tier one and regional service providers worldwide.
Chairman and CEO Jerry Guo said he expected the deal would create a global leader in the rapidly growing broadband enablement space for service providers across all access technologies.
“This deal positions the combined company with a broad, highly competitive product portfolio for new 4G architectures and 5G wireless, it adds fixed wireless products to our portfolio, enabling us to address the large 5G fixed wireless access market.”
NetComm CEO steps down
Simultaneous with the takeover announcement, NetComm announced that managing director and CEO Ken Sheridan would step down but would continue as an executive director on NetComm’s Board. CTO Steve Collins has been appointed interim CEO.
NetComm said his resignation was due to family health issues and that he had agreed to continue in an executive capacity to support the acquisition process.
Strong first half result
Netcomm also reported its results for the six months to 31 December. Revenue was up 6.5 percent on H1FY18 to $94.3m and NPAT down from $3.7m to $2.3m. Milne said the revenue growth had been underpinned by strong fixed wireless and network connection device orders, and the company had made strategic investments made in 5G that would position it well for the future.
Telecommunication infrastructure equipment and industrial internet of things (IIoT) revenue — which it defines as “all businesses outside of the ANZ consumer broadband business” — was up 11% to $83.6m and now represents 89 percent of group revenue.
NetComm had no bank debt and $17.4m cash in the bank at the end of December 2018.
Collins said NetComm had commenced investments in 5G technology to position the company for a “once in a decade” technology wave.
“We are very experienced with fixed wireless technologies and excited by the opportunities 5G brings to NetComm,” he said. “We plan to be early to market with a commercial fixed wireless 5G solution for use in large global markets.”
