DataPro`s R45 million acquisition of Internet service provider (ISP) Atlantic Internet Services (@lantic) has given it an entry into the consumer market.
The group says the deal is also seen as a significant growth area for future voice over Internet Protocol products and services.
Atlantic has also not penetrated the corporate market, which is DataPro`s focus area, particularly on the small to medium enterprise level.
DataPro announced the acquisition on Friday evening, saying it would pay through the issue of about 85.39 million vendor shares to be placed primarily with third parties at a price of 52.7c a share - a 10% discount to the 30-day weighted average price of DataPro shares.
The group`s financial director, James Herbst, says the acquisition comes at a price-earnings ratio of 18, which may lead analysts to regard it as expensive.
"However, what is important to note is that the ISP landscape is now in 'land grab` mode, where gaining precious market share and customers is paramount," he says. "Moreover, we anticipate earnings being enhanced by around R5.4 million for the year 1 September 2005 to 31 August 2006."
Atlantic generates monthly annuity revenue of about R3.2 million a month and for the year to February 2005 achieved after-tax earnings of R2.56 million. For the half-year to February 2005, DataPro reported attributable income of R4.56 million on turnover of R50 million.
"Atlantic is a well-run business and has a superb distribution channel of over 135 franchisees around the country, as well as 500 dealers," Herbst says. "The purchase gives us access to this channel and allows us to push our products and solutions offerings down this channel."
The group says Atlantic is the largest independent consumer ISP in SA, with a customer base of more than 32 000 users.
"It is the intention of DataPro Group to retain the @lantic brand and as such the business will continue to trade independently," it adds.
The DataPro share closed at 58c on Friday, down 2c or 3.3% from Thursday`s close.
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