Spark buys South Island IT service firm for $50m

Spark shares last traded at $3.22, and have gained 3.4 percent this year.

Spark New Zealand, the country's biggest telecommunications company, will buy Computer Concepts Ltd (CCL) for $50 million as it continues to acquire IT services firms to beef up data-driven revenue.

The acquisition value, which doesn't include debt, will be funded through cash and Spark's existing borrowing facilities, adding cloud and platform IT services and extending Spark's business in the South Island, it said in a statement. Spark has been transitioning its business away from traditional lines-based revenue in recent years, putting greater emphasis on data-driven services, and has purchased IT services firms Revera and Appserv to do so.

"Our strategy is to better enable out customers to succeed in a digital world, and cloud is an integral part of that," Spark Digital chief executive Tim Miles said. "This acquisition builds on the earlier purchases of Revera and Appserv, and with CCL now in our group we are better positioned to assist New Zealand business needs in the areas of platform IT service and cloud computing."

CCL is forecast to generate revenue of about $50 million and earnings of $8 million in the year ending March 31, 2016.

Spark is aiming to be the country's top provider of cloud-based services in the country, having been toppled as the number one IT services firm by Datacom in 2014.

The company will buy all of the shares in CCL parent Property Leasing, which is controlled by interests associated with managing director Darryl Swann with about 80 percent. CCL chief executive Andrew Allan owns almost 20 percent.

The purchase has been excluded from Spark's annual guidance for capital expenditure of about $380 million in the 2016 financial year. It extended its bank funding lines in September, and last week raised $100 million in a bond issue.

Separately, Spark said it bought unused radio spectrum from Craig Wireless and Woosh Wireless (NZ) for $9 million.

Spark shares last traded at $3.22, and have gained 3.4 percent this year.