Top-notch student accommodation providers and local governments can look forward to utilising the Superloop network in what can be considered a huge win for the network provider. That’s because Superloop (ASX: SLC) has acquired internet provider VostroNet Holdings Pty Ltd (VostroNet) for $35 million.

VostroNet provides wholesale Fibre-to-the-Premises (FTTP) and WiFi networks to student accommodations and other multi-dwelling buildings. Though Superloop is not a major network provider, this acquisition positions the network in a lucrative position. The Company will be able to consolidate and expand its strong WiFi position into adjacent On-Net broadband markets. Together with VostroNet’s infrastructure, high speed FTTP and WiFi networks, Superloop will expand its offerings to reach a greater market share starting with student accommodations.

The acquisition is valued at $35 million, including $24.5 million in cash and the rest in Superloop shares. Overall, the acquisition will be funded through the Company’s existing cash reserves and will depend on the satisfaction of conditions preceding the sale. The vendors may also be entitled to ‘earn out’ payments (capped at $15 million in cash), subject to meeting certain take-up targets related to contracted sites and obtaining $2.1 million of run-rate synergies (assumed to be realised within 24 months of completion). 

Superloop’s Managing Director and CEO, Paul Tyler, said, “We are extremely pleased with this transaction. In addition to strengthening our position in the provision of on net broadband services to the student accommodation market, it also adds capability in the growing build to rent and MDU markets. We welcome the employees from VostroNet to Superloop and look forward to deepening the relationship.”

Arguably, few people need the internet more than students. So, Superloop will work with VostroNet to provide WiFi solutions to notable companies, such as UniLodge, Iglu Student Accommodation, Queensland University of Technology and local government council Sunshine Coast Council. Plus, it will provide smart FTTP network infrastructure to property developer Billbergia, CBUS (Construction and Building Union Superannuation) and Consolidated Properties. 

Combined, the two companies will cement themselves as a market leader in the supply of broadband in the Tertiary Student accommodation sector. After all, it will provide national coverage to nearly 40,000 student beds. 

Superloop is currently developing its OnNet Smart Communities division, which is why this acquisition comes at the perfect time. VostroNet is bringing aboard FTTP capabilities, installed base and pipeline to address similar markets such as New Developments, Build to Rent, broadacre and multi-dwelling unit (MDU) markets and associated infrastructure. 

Most of VostroNet’s revenue comes in a recurring form. Given that, on a FY23 full-year pro forma basis, the acquisition is expected to bring in approximately $4.6 million of EBITDA (before synergies), and the EBITDA is expected to be 7.5 times the existing value. VostroNet joins the roster of some of Superloop’s most profitable acquisitions, including Exetel and Acurus, which introduced 115,000 business, wholesale, and residential customers to the Company.

VostroNet is expected to have a similar effect. Superloop aims to complete this acquisition towards the end of the calendar year.