Hawaiian Telcom (Nasdaq: HCOM) is making a bigger splash in the data center business by signing an agreement to acquire Honolulu-based SystemMetrics for about $16 million in cash.
Upon completion of the acquisition, SystemMetrics will become a wholly-owned subsidiary of Hawaiian Telcom. After clearing customary capital adjustments and earn-out provisions, the telco said it expects to close the deal by the end of this month.
So what does Hawaiian Telcom gain from this purchase?
For one, the telco will get a 6,500 square feet data center that currently serves more than 400 customers and can be expanded as customer demands dictate. SystemMetrics has also been a profitable company, generating revenues of about $8 million and pro-forma EBITDA of approximately $2 million.
What drove Hawaiian Telcom to pursue SystemMetrics was the ongoing growth of data center services, the adoption of cloud-based technologies to run more of their business functions, and growing demand for outsourced solutions. According to market research, the Hawaii data center services opportunity is estimated to be over $100 million.
This latest acquisition illustrates Hawaiian Telcom's ongoing efforts to enhance its business service capabilities.
Due to its acquisition of Wavecom, Hawaiian Telcom's Q2 business revenue rose 7 percent year-over-year to $42.6 million. In particular, IP-based services including Ethernet and cloud continue to be a new revenue driver as its legacy TDM-based services continue to decline.
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