The purchase yesterday of South Island company Computer Concepts Ltd would allow Spark to expand quickly and easily in the South Island, Craigs Investment Partners broker Chris Timms says.
Spark announced yesterday it had bought CCL, a South Island-based IT infrastructure and professional services concept company, for $50 million.
CCL was founded in 1990.
Additionally, Spark also announced it had agreed to buy new spectrum from Craig Wireless, and its related company Woosh Wireless, for $9 million.
Spark Connect chief operating officer David Haverscroft said Spark was interested in the spectrum as it was complementary to other spectrum holdings.
Mr Timms said it was good to see Spark using its balance sheet to propel the business forward.
The additional spectrum was always useful and it had come with a small price tag.
"It just continues to build Spark's network advantage into the future.''
CCL, which has an office in Dunedin as well as Christchurch, Nelson, Blenheim, Wellington and Auckland, was a complementary business and an important space for Spark.
It was a higher growth area than mobile and broadband and the margins were good.
It was earning accretive and would help Spark expand quickly and easily in the South Island instead of the slow grind to win tenders which could involve significant investment and a long time before results were seen, he said.
"It's been kept as a stand-alone business unit so there aren't synergies per se, but I would imagine Spark will be able to improve the margins in the business if it can increase its scale and help on best practice.''
CCL's operating profit margin was about 16% against Revera at about 26%.
The purchase price looked reasonable at $50 million for $509 million of revenue and $8 million of operating profit, Mr Timms said.
Spark Digital chief executive Tim Miles said Spark was pleased to have a cloud services company with the track record and reputation of CCL joining the team and strengthening its market-leading capabilities.
The acquisition built on the purchases of Revera and Appserv.
"With CCL now in our group, we are better positioned to assist New Zealand business needs in the areas of platform IT services and cloud computing.''
CCL was complementary to Spark Digital and its acquisition reinforced Spark Digital's commitment to business in the South Island following the significant investment in a new data centre in Christchurch and the expansion of Spark's Dunedin data centre, Mr Miles said.
