announces the asset acquisition of VoIP operations of the entities doing business as CommX
. KeyOn Communications’ largest and controlling shareholder is California Equity, an entity controlled by Dr. Patrick Soon-Shiong. Dr. Soon-Shiong, having built and sold two multi-billion dollar pharmaceutical companies in the past few years including Abraxis BioScience to Celgene Corporation, is a physician, scientist and philanthropist who has made clear his intention to develop a comprehensive “health information highway system” throughout the United States.
It is expected that CommX will add over $3 million in annualized revenues and will immediately make a meaningful contribution to EBITDA. CommX has experienced strong annual organic growth over its history and averaged 15% over the 12 months ended 2010. For the first quarter ended March 31, 2011, on a pro forma basis after giving effect to the two acquisitions completed in the quarter and CommX’s results for the quarter, KeyOn would have revenues of approximately $3.4 million and a narrowed Adjusted EBITDA loss of $270,000.
The strategic acquisition of CommX provides KeyOn with a vertically integrated platform to upsell VoIP services to its more than 20,000 wireless broadband subscribers. Moreover, acquiring the CommX operations will give KeyOn ownership of an intelligent, VoIP softswitch, creating higher overall margins in selling VoIP services. Management anticipates that KeyOn should experience a lower cost of new customer acquisition in selling VoIP given its existing relationship with potential customers as their broadband provider.
According to Infonetics Research, in 2010 VoIP services revenue grew to $50 billion, up from $35 billion in 2008, a 21% annual growth rate. Infonetics also forecasts the combined residential/SOHO VoIP services market will grow to $74.5 billion in 2015.