Not much on the announcement front today in terms of companies I follow but this one announcing it had made its final Symbio/MNF Direct Business acquisition instalment and thus net cash flows would improve by $833k a month going forwards. It interested me because as a shareholder it has resulted in the company being up around 20% today. The thing is this isn't new news. In fact they've told the market umpteen times since making the acquisition exactly what the instalment schedule would be, including in the 4C last week. It's an example of how much opportunity can exist in the microcap market given how irrationally it can operate at times.

Today 'price sensitive' announcement:

Excerpt from the 4C last Friday:

By the way, the improvement to net cashflow is solely to investing cashflows, not operating cashflows.

Following fundies can be a place to get a perspective on a stock, and to alert you to those you may have overlooked in screening. Ron Shamgar who heads Australian equities at Tamin is one of my follows and this week they released piece on Vonex. My first reaction was, hasn’t that whole market been or being replaced by Teams?

Ron thinks it’s cheap, but is there a reason more than Teams, or has the market got this one mispriced? 

The company is focused on the SME market for mobile, internet, traditional fixed lines, and hosted PBX and VoIP services, and more recently on retail customers with the upcoming acquisition of MNF direct business.

Ron also thinks Vonex is serving an unmet need for SME’s for reliable, affordable, flexible, scalable and friendly services. Not going to disagree there are some truly poor operators in the market and move up the quality chain does come with a commensurate fee increase. These are largely commodity services, however, they are services we now rely on to conduct our businesses. Without follow up service, these SME’s without inhouse tech skills are stuck if there is an issue. 

While I am generally not a fan of roll ups, Vonex has been making acquisitions that provide scale as well as geographic reach and on the surface they all seem logical. They indicate cost savings, it will be interesting to see if 1+1 = 1 as happens all too often or the synergies can be realised.

The reference to Qantas rewards partnership puzzles me. I don’t understand this attraction, especially in SME land. Most SME’s are not regular travellers so this looks to me to be marketeering in fabrication of a point of differentiation.  

Couple of elements financials that are attractive is the fact they are profitable, with strength in their ARR this looks set to continue with high levels of growth in this metric. 

Ron finishes that ABB, have recently completed a $110m placement to fund an M&A strategy, with Vonex potentially on the target list. Now that would be a prediction and a half.

Interesting business that appears to be doing the right things. This is an extremely competitive and highly price sensitive market, with evolving technologies that could wipe away parts of the revenue stream (such as Teams vs hosted PBX) I will be watching from the sidelines and kicking myself if Ron is right about ABB. 

https://www.tamim.com.au/tamim-stock-stories/is-this-the-telco-you-need-in-your-portfolio

FURTHER UPDATE

Multi-Year Wholesale Agreement with Orange Business Services

Highlights:

~ Vonex signs a wholesale agreement to supply Orange Business Services, a network-native digital services company and the global enterprise division of the Orange Group (EPA: ORA), with business-grade Mobile Broadband services throughout Australia

~Vonex is gaining momentum across its Wholesale business as it delivers sought-after products and services to new and existing telco customers

Agreement Key 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.

This notice ends the Trading Halt for VN8

Disc: I hold

The Directors of Vonex Limited (ASX: VN8, Vonex or the Company) hereby request a trading halt of the Company's securities. The trading halt is requested until an announcement is made to the market pending clarification of the key terms of the wholesale agreement entered into between the Company and Orange Business Services which is expected to be made before the opening of trading on Monday, 8 February 2021.

The Company is not aware of any reason why the trading halt should not be granted

Note~ my highlighting

Disc: I hold

Multi-Year Wholesale Agreement with Orange Business Services

Highlights:

~ Vonex signs a wholesale agreement to supply Orange Business Services, a network-native digital services company and the global enterprise division of the Orange Group (EPA: ORA), with business-grade Mobile Broadband services throughout Australia

~ Vonex is gaining momentum across its Wholesale business as it delivers sought-after products and services to new and existing telco customers

DISC: I have small holding

Completion of Nextel Acquisition

Highlights:

• Vonex completes its acquisition of established NSW-based telco service provider Nextel, providing a boost to the Company’s annualised recurring revenue (ARR), with group ARR increased to more than $18 million

• Acquisition substantially enhances Vonex's presence in the Sydney and NSW markets for telco services to small-to-medium enterprises (SMEs), adding market-leading products and services

• Strategically compelling acquisition creates opportunities for cross-selling and product expansion through a growing national SME customer base

• Total consideration of ~$1.575 million, consisting of $315k in cash (more than offset by Vonex’s recently-received R&D refund of $541k) and 5.5 million escrowed shares

DISC: I have small holding