Here’s why Veris’ share price rose nearly 30pc Monday. (Hint: Telstra)
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Surveying firm Veris Ltd’s (ASX: VRS) share price had spiked by 27.1% by the time markets closed on Monday following the news that Telstra Purple – the telco’s IT, managed services and consulting arm – had acquired its wholly-owned subsidiary, networking and connectivity provider, Aqura for $30 million cash.
Aqura’s LTE technology solutions are used by some of the country’s major mining companies such as Rio Tinto, Roy Hill, BHP, and FMG. This includes the design, installation, and commission of private 4G mobile networks, “underpinning digital transformation programs of large-scale operational activities in highly remote locations.” Its other telecommunications infrastructure solutions include industrial wireless & IoT, complete access networks, and unified communications.
The acquisition is expected to be complete by the end of February, subject to closing conditions and approvals.
Veris claims to have received a number of unsolicited approaches to acquire Aqura, and that the sale “represents a compelling outcome for all of Veris’ stakeholders, including shareholders”.
“Following the sale of Aqura, Veris will be in a position to retire all bank debt and be well capitalised with a strong balance sheet and a significant net cash position,” chair Karl Paganin said in a statement.
“This balance sheet strength will place Veris in a strong position to pursue its growth ambitions for Veris Australia and underpin the continued expansion of Veris Australia’s digital and spatial data-as-a-service strategy.”
The sale proceeds will enable further investment in leading-edge equipment and personnel skillsets, to further capitalise on its national footprint and Tier 1 client base across the infrastructure, property, resource, defence, utilities, and government sectors.
“We continue to make significant progress on transforming Veris Australia and implementing our digital and spatial strategy to generate higher returns and post the sale of Aqura, we will be strongly positioned to continue this growth trajectory,” he said.
Veris share price spiked from 7.70c to 7.93c on Monday morning, dipping briefly to 7.05c, before recovering to 7.63c by lunch, and then hovered around 7.5c the rest of the afternoon until close.
Why Telstra shares soared in 2021
It has been a rocky couple of years for Telstra, whose share price declined by around 42.7% between January 2017 and December 2020. But that all changed from January 2021, which marked a watershed year for the telecommunications company whose share price was 28% higher by December 28 2021 ($4.17) than it was the year prior ($3.00).
Telstra’s share price success can be attributed to the confluence of several factors, including the success of its T22 strategy, a sweeping four-year restructure program that started in 2018, and its four-year growth and expansion plan, dubbed T25, which includes an undertaking to expand 5G coverage by 80% over four years, scale-up its loyalty rewards program, Telstra Plus, while stripping a further $500 million in costs.
Its market value was also helped by a number of strategic acquisitions made over the calendar year. This includes partnering with the federal government to buy the Pacific’s largest telecommunications provider, Digicel Pacific in a $2.1 billion bid to prevent China from getting its hands on the company. It also acquired GP clinical and practice management software company, MedicalDirector, for $350 million.
Despite a largely unexplained nosedive on January 18th – which could be owed largely to broader market conditions, given there were no significant announcements from Telstra over this period – Telstra’s shareprice is still up by around 20% for the year to date.
As it stands at close, Telstra’s share price ($3.92) is around 24.5% higher than it was on Monday February 1st 2021, ($3.16).