Service provider Alternative Networks has bought billing and software provider Aurora Kendrick James Group (AKJ) for up to £5.5 million.
At the same time, it has signed a new three-year fulfilment contract with an unnamed network operator to provide 50 business customers of the network with billing and customer services. It said the deal will generate around £1 million in fees in the first year.
The AKJ deal sees Alternative Networks pay £3.75 million in cash and £800,000 in shares initially, with a deferred fee of up to £750,000 cash and £200,000 in shares payable in 12 months linked to performance of the unit over the next 12 months.
The maximum payment will be due if AKJ boosts contracted revenues by 10 per cent in the period, net of any customer losses.
AKJ provides billing services to over 50 UK telecoms and IT service providers, and it has worked with Alternative Networks for almost 10 years.
Alternative Networks said the decision to bring the software in house will protect its intellectual property, having invested £350,000 in the past two years in the AKJ software to deliver a bespoke ‘Clarity’ billing platform to SME and corporate customers to offer fuller control of billing costs and usage.
The exclusive licence Alternative Networks held to the ‘Clarity’ software was set to expire next year in 2010, and the acquisition guarantees Alternative Networks exclusivity on certain elements of the software platform.
Alternative Networks will develop its ‘Clarity’ customer portal further. It also said its interests do not clash with the large majority of existing AKJ clients and that it will develop the portfolio of services and products that it can offer to European telecoms and IT service providers, systems integrators, resellers and dealers, based on AKJ’s platform.
Alternative Networks chief James Murray (pictured) said: “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 provides fixed and mobile voice and data solutions to over 4,000 SME and small corporate customers. In the year ended 30 September 2008, its sales increased 30 per cent to £93.7 million and underlying operating profits increased 31 per cent to £10.4 million.
In the year ended 31 July 2009, AKJ reported sales of £3.6 million, a pre-tax profit of £300,000 and underlying EBITDA of £585,000.