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Telecom buys local data centre firm Revera for $96.5 mln

Monday 29th April 2013

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Telecom Corp, the country's biggest telecommunications company, has bought local data centre firm Revera for $96.5 million as it looks to get greater coverage in the cloud and build IT services.

The Auckland-based company will pay for Revera through its existing cash and borrowing lines, with the transaction expected to settle in May, it said in a statement. Revera reported sales of $50 million in the year ended March 31, with earnings before interest, tax, depreciation and amortisation of $13 million, and expects to grow EBITDA by 15 percent next year.

"This acquisition adds a respected brand that deepens our IT services portfolio for business customers, particular with regards to Cloud services," Telecom chief executive Simon Moutter said. "Both Gen-i and Revera will be better positioned to respond to evolving customer needs in the areas of big data and cloud computing."

The acquisition comes as Telecom goes through laying off up to 1,200 staff in a bid to strip out as much as $110 million in annual wage costs. The phone company is shifting its focus to offering services and away from building networks to become a data-driven and mobile-focused telecommunications operator.

Telecom's shares rose 0.6 percent to $2.58 today, and have gained 13 percent this year.

Revera will operate as a standalone business though duplication between units will be kept to a minimum, and Telecom will seek to align activity across Gen-i and Revera.

Gen-i chief executive Tim Miles said the acquisition gives his unit "more data centre capacity, more virtualisation expertise and more horsepower to support clients."

The acquisition also gives Telecom access to Revera's all-of-government contract to host information technology infrastructure, something Gen-i missed out on when they were awarded.

Revera was set up in 2002 when Hitachi Data Systems local managers, Roger Cockayne and Wayne Norrie, bought a controlling stake in the New Zealand operation and refocused it on ICT infrastructure services.

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