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Click’s acquisition to complement the existing business and improve operating leverage: Amaysim Australia Ltd (ASX: AYS) recently announced about acquiring Click Energy and this is a significant milestone in the transformation of company as it increases connectivity to the Australian household and complement its existing suite of mobile and broadband products. Click is a Melbourne based online energy retailer offering electricity in four states (Victoria, NSW, Queensland and South Australia) and gas in Victoria and NSW. Click utilizes an online focused business model to provide competitive energy products to customers based on its core value proposition of low cost, no lock-in contract and monthly billing by providing self-service platform. Click’s business model is strongly aligned with Amaysim as it helps in significantly enhancing scale, operating leverage and cross-selling by adding an additional 136,000 households to AYS existing customer base of ~600,000. Over the next few years, Amaysim intends to reach ~300,000 homes with multiple products (NBN, mobile and energy) with a possible average household ARPU (average revenue per user) of $200/month. Acquisition is expected to generate annual pre-tax cost synergies of approximately $5 million by the end of FY18F. These cost synergies are primarily expected to be generated from efficiencies around customer service, IT systems and processes. The acquisition is expected to be 20%+ EPS accretive for Amaysim shareholders on an underlying NPATA basis in the FY2018.
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