High-speed internet provider Vocus Communications Limited (ASX: VOC) announced the acquisition of a data centre in Perth for $11.9 million last Thursday. The centre is being bought from ASX-listed IT solutions provider ASG Group Limited (ASX: ASZ).
Vocus shares are up 142% over the past year as it cements its prospects of becoming a leading player in the fibre-optic future of internet connectivity across Australia and New Zealand. The Perth acquisition is forecast to generate annualised EBITDA of approximately $2 million and to be earnings per share accretive in its first year.
After a successful capital raising the highly-regarded chief executive James Spenceley has been on a shopping spree. Vocus also recently bought New Zealand company FX Networks Limited for approximately $108 million in a strategic move aimed at replicating its Australian business model providing fibre, internet and data centre services across the Tasman in New Zealand.
Locating data centres close to users allows information to be transmitted to them faster and the fastest way to transmit information is via fibre-optic cables. A single fibre can transmit around 100 billion bits per second (10,000 times faster than an average broadband connection) and a cable can contain hundreds of fibres, therefore giving it the capacity to transmit the information requests of millions of users. It's these fibre-optic cables (and the information they contain) that have proven so irresistible to the snooping ways of government security services around the world!
Vocus is in the middle of a growth sweetspot thanks to its foresight in acquiring and developing the infrastructure required to provide the best-in-class next generation fibre-optic communication and data centre services. Moreover, the increased use of digital data looks a trend set to accelerate and naturally increase demand on Vocus' services.
Other businesses benefiting from the fibre-optic future include TPG Telecom Ltd (ASX: TPM) ($5.66) and Amcom Telecommunications Limited (ASX: AMM) ($1.95). All three look attractive opportunities to me, with Vocus ($5.30) the pick on the basis of its highly regarded management team.
