The second-largest home phone provider in regional Australia, the Moruya based Southern Phone is in the process of being sold to one of the countries largest energy providers in a move that will deliver a cash injection to local government.
Southern Phone, has entered into a conditional agreement under which AGL Energy Limited (AGL) is proposing to acquire 100% of the company.
The AGL offer is an all-cash offer of $27.5 million, delivering what the company says is an outstanding return of $785,714 on each shareholder’s total investment of a tiny $2.
Southern Phone Managing Director, David Joss says that “given our shareholders are all local Councils, the proposed acquisition by AGL presents a great opportunity for the Councils to utilise the return to address priorities facing their local communities.”
The telco was formed in 2002 with funding from the Commonwealth Government’s Networking the Nation program. It is owned by 35 local councils, including Snowy Monaro, Goulburn Mulwaree, Bega Valley, Eurobodalla, and Snowy Valleys, each has an equal shareholding.
In the past 14 years, Southern Phone has grown to a customer base of over 100,000. It employs more than 135 people at it’s Moruya HQ.
“Our company has grown to become one of the most successful providers of fixed line, mobile and Internet communications services across regional Australia,” Mr Joss says.
“Our unique Local Government ownership structure has created a community focused business that has achieved great success.
“However, with the advent of the NBN the need for achieving a greater share of the market has significantly increased and the timing is now right for a new shareholding structure.
“AGL is committed to maintaining the Southern Phone brand and products, as well as the existing business operations and telecommunications services to our 100,000 customers, across regional Australia.
“Importantly, AGL will continue to retain the Southern Phone team.
“We believe the AGL offer is a great opportunity for our shareholders, our staff, our customers.”
Southern Phone’s current constitution limits ownership to Australian local government shareholders and it can only self-generate capital, but Mr Joss says that the Southern Phone Board is unanimously recommending shareholders accept the AGL offer.
“The Board has made this decision based on independent advice that the offer represents fair value for shareholders and provides a great outcome for the company, its customers and the regional communities we serve,” he says.
AGL CEO and Managing Director, Brett Redman, says the acquisition presents a range of exciting opportunities for their residential and small business customers.
“We are focused on responding to our customers’ evolving needs as we transform from a major energy retailer to a major, broader essential service provider,” Mr Redman says.
“We believe the acquisition, as part of our broader strategy, will create significant value for our connected customers and also for our shareholders.”
The Southern Phone Board is hoping to have shareholder approval of the sale before the end of November.