Agreement with CBA’s strategic telecoms partner

Published 10-JUN-2022 11:00 A.M.

2 min read

INVESTMENT MEMO: VN8 Memo

CORPORATE: Strategic partnership

This morning, our small cap telco investment Vonex (ASX:VN8) announced its partnership with More, the Commonwealth Bank (CBA) -backed telco provider, perhaps best known for its Tangerine broadband services.

Both parties have entered binding heads of agreement which will see VN8 become More’s exclusive provider of Hosted PBX services to new and existing CBA customers. VN8 will also deliver a new hosted PBX and IP telephony enablement platform for More's new and existing small to medium enterprise (SME) customers.

As we’ve mentioned previously in covering VN8, we like the company’s aggressive growth through acquisition strategy, which has fast-tracked improvements in several key metrics we track for VN8 (notably annual recurring revenues and PBX customers). The acquisition strategy has helped lead to today’s More partnership, as it is actually through VN8’s subsidiary, 2SG Wholesale - the first of VN8’s four acquisitions over the last 2 years.

Upon full release of the Platform and migration of existing Hosted PBX business services, VN8 expects a significant increase to annual recurring revenue from the More partnership, predominantly from license fees, hardware and call carriage. In addition, Vonex will charge a one-off fee for the initial software development and an ongoing monthly management fee for the platform.

Today’s news fits in with both the key objectives we’d like to see VN8 achieve this year, namely to become bottom-line positive and continue to grow its market share and national customer base.