Question 1

What is the government doing to stimulate technology spending among small businesses?

Accepted Answer

The Australian Federal Government has committed $1 billion in tax relief through a 20% bonus deduction on digital expenses for SMBs. This fiscal intervention aims to reverse the spending contraction seen between FY19 and FY21, where SMB mobile and fixed service spending declined at CAGRs of 9.9% and 4.3% respectively.

Question 2

Are challenger telcos successfully taking market share in the enterprise segment?

Accepted Answer

Challenger brands are aggressively capturing high-value contracts, with Aussie Broadband reporting 67% growth in business services as of December 2021. Recent wins include Aussie Broadband’s three-year Mitsubishi Motors contract and Macquarie Telecom’s 720-site SD-WAN and VoIP rollout for Domino’s.

Question 3

What are the current valuation benchmarks for ICT service acquisitions in the region?

Accepted Answer

M&A activity in the ICT sector is commanding high premiums, evidenced by NCS acquiring Arq Group for $290 million at a 15.7x EV/EBITDA multiple. This acquisition is part of a broader consolidation trend that has seen NCS grow its Australian headcount to 1,900 staff across four recent deals.

Question 4

How significant is the shift from traditional connectivity to managed ICT services?

Accepted Answer

The transition is substantial, with ICT and managed services now accounting for 46% of total revenue at Optus Enterprise. This shift is supported by strong enterprise demand, as 40% of organizations report plans to increase their SD-WAN spending over the next 12 months.

Monthly Enterprise Roundup of Mar 2022

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