Company Interview / Swooping in on Vonex

Key points:

Swoop acquires 19.9% stake in Vonex.Swoop reports 18% organic subscriber growth in FY24.Combined revenue is forecasted at $130-$135 million with significant synergies.

Swoop Holdings (ASX: SWP) acquires a 19.9% stake in Vonex, aiming to block Maxo Telecommunications' $13.4 million takeover offer. Alex West from Swoop states that their revised offer is in the better interests of long-standing shareholders. The Maxo scheme vote is delayed until October.

Alex shares Swoop's 18% organic growth in FY24, bringing in approximately 180,000 subscribers across mobile, NBN and fixed wireless services. The Vonex acquisition will bolster their presence in small business voice services and contribute significantly to their revenue and synergy goals.

Alex outlines the potential revenue increase, combining Swoop and Vonex to approximately $130-$135 million with EBITDA improvements. The $5 million synergies and improved free cash flow projections make this acquisition essential for Swoop's strategic growth.

Full unedited transcript below:

0:00

Swoop Holdings has acquired a near 17% stake in von X as part of its strategy to potentially block Maxo Tele-communications $13.4 million takeover offer for the company Max hotel, increasing its offer for von X from 3.75 to 4.1 $0.09 in a revised scheme of arrangement to acquire the company. Let's get the details from swoop CEO Alex West. Alex, tell us about the battle here.

0:27

Hi, Juliette. Yes, um, we've been working on this transaction for quite some time, uh, with the board of Onex. Uh, obviously that title had come in prior to us. We provided a revised offer that we think is in the better interests of the long standing shareholders. Um, and we've actually now upped the stake to 19.9, uh, in terms of shares of the company and effectively just waiting for the Maxwell scheme to come to a vote, which they've now actually delayed until October. All right. So in terms of, I guess, what we've been seeing as well with this acquisition, what are you seeing for I guess, hopes of getting to that point when you're looking at the 17% voting power.

1:07

Sure. Um, look, obviously we're hoping to that by voting our share down. Um, the Maxo scheme, uh, won't necessarily get up or prior to that, actually reaching an agreement with the

1:20

board. Um, on the values of the two differences is, uh, theirs is an all cash, uh, offer at four, as you said, at 4.19. Uh, and from a shareholder perspective, if you'd come in at that listing at $0.20 or at the subsequent raises at $0.11, you're effectively now being, um, let go at two thirds of that, um, loss in value. So our offer, um, is partial cash as well as scrip. So we're offering the shareholders to come on board, um, and continue their journey, um, in a combined suite business. So, Alex, tell us how you're going at swoop, the number of subscribers that you're gaining. And I guess the hopes for for year 25.

2:01

Sure. Um, look, obviously we spoke a couple of weeks ago. Fantastic. Uh, in FY 24, we saw an 18% growth, um, all organic in our subscriber base. Um, we now have around about 180,000 subscribers on a mix of mobile products, uh, NBN, as well as our own fixed wireless high margin services. Uh, and where the bionics play comes in is we're looking to increase, uh, presence in small business voice. Uh, and bonnet, um, the presence would actually, um, and company would actually pair quite nicely with that to help us grow.

2:34

We are having a little bit of trouble to hearing you at the moment, Alex. Hopefully that is going to be rectified. But in terms of this battle, then for phonics, what does that mean for the broader scope for swoop?

2:46

Look, um, that's a combined business. You'd be seeing us reach revenues, um, just on an FY 24 combined basis. Uh, we would see that at about 130 to 135 million in revenue. Uh, you're taking their EBITDA of around five, and ours is 15 to 20. Um, but what's really attractive for us is actually the $5 million worth of synergies that we would see come up at the same time. Uh, they're also very, um, student, um, prior to funding their debt and would actually then see us reach our free cash flow goals much, much sooner than originally planned. I know we did speak just a couple of weeks ago. Alex, it's, um, been fast paced since reporting season, though. Tell us where you're at now that we're pretty much heading into the second quarter, I guess of 25.

3:32

Sure. Look for exporters. Um, been going great. Uh, finished very much where we left off in Q4. We're seeing record sales numbers across all of our main products being NBN, uh, fixed wireless and mobile. Um, so we're seeing great growth from there. Uh, our teams are delivering well, and we're really sort of getting into, um, growing that organic story.