The purchase of AKJ is noted as being for a maximum consideration of £5.5m (initially £3.75m cash and £800,000 in shares, with up to £750,000 cash and £200,000 in shares payable in 12 months). Alternative Networks has used AKJ’s software for almost 10 years and has invested considerable resource in applying it to provide customers with a simple and efficient mechanism to access and control the billing and usage of their communications equipment.
Bringing the software in house will protect Alternative Networks’ intellectual property and guarantees exclusivity on key elements of the software that are important for customer attraction and retention.
The acquisition will also accelerate the development of Alternative Networks’ customer service portal, enhancing the existing service offering and creating opportunities for new revenue streams by working with third party telecoms and IT services providers.
AKJ will help in the management of a new contract to provide billing and customer services for a major network operator. The contract is for 3 years and is expected to generate approximately £1 million in fees in the first year.
James Murray, Chief Executive of Alternative Networks, commented: “Acquiring the exclusive right to AKJ’s software will accelerate our development and enhance our broader service offering. It represents a sensible use of cash, increases our commercial opportunities and provides a sound strategic platform from which to gain an increasing share of the market, both organically and through further acquisitions. Specifically, exclusive access to the software will facilitate the efficient integration of future acquisitions.”
Alternative Networks has been awarded a contract to manage the billing and customer services of a major network operator. The contract is in respect of approximately 50 business customers spending an average of over £50,000 per annum and is expected to deliver management fees of approximately £1 million to AN over the next 12 months. The contract is for 3 years. AN is not restricted from selling its own non-competing products and services to these customers.
The Company won this business through a tender process in which its billing platform and related call management and reporting services were subjected to considerable scrutiny, as well as the company’s CRM platform and customer services, and the successful features of these services were critical to the outcome of the tender.
The provision of billing and customer services to major network operators is similar to other existing ancillary services AN carries out in partnership with others, but it is not core to the strategy of the company. However, it is expected AKJ will contribute considerably to managing this business, and the cashflow arising from this contract win will help fund further development of the group’s CRM and customer portal.