October 16, 2019 / 3:52 AM / a month ago

Australia's AGL Energy tiptoes into telcos after scrapping Vocus bid

MELBOURNE (Reuters) - Australia’s AGL Energy Ltd (AGL.AX) on Wednesday offered to buy local telecom firm Southern Phone Company in its second attempt this year to expand into the telco sector, aiming to cross-sell broadband and data to its large base of power and gas customers.

AGL offered A$27.5 million ($19 million) for Southern Phone, which has 100,000 customers spread outside Australia’s big cities.

The pricetag is a fraction of the A$3 billion AGL offered and then withdrew for Australia’s fourth-largest internet provider, Vocus Group, in June.

“I think this is a good first move into this space,” AGL Chief Executive Brett Redman told Reuters in an interview.

“Here we’ve got the nucleus of a fully blown set of offers and the ability to provide both broadband, mobile and other products.”

Southern Phone Co (SPC) said in a separate statement its board had unanimously recommended that its shareholders, which are local councils, accept the offer.

AGL said it would maintain Southern’s brand and operations.

About 200,000 of AGL’s customers live in the areas served by SPC, and Redman said they would make a good starting point for AGL to test systems for cross-selling mobile and data products.

He said the company would not necessarily need any other acquisitions to grow in the telecommunications space, but did not rule it out, after bedding down the SPC business.

“You can imagine that after we did Vocus, lots of people come to talk to us, and we always listen,” Redman said.

AGL’s shares were flat at 0317 GMT, while the broader market was up about 1.2%.

Reporting by Sonali Paul; Additional reporting by Ambar Warrick in Bengaluru; Editing by Muralikumar Anantharaman and Rashmi Aich

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