Wollongong City Council, New South Wales, has agreed to sell its two shares in Southern Phone Company Limited to AGL Energy Limited.
An offer was made by AGL to acquire 100 percent of Southern Phone, one of the largest telecommunications companies in regional Australia, in mid-October. Southern Phone recommended councils accept the offer.
The AGL offer is an all cash offer of $27.5 million, delivering an outstanding return of $785,714 on each shareholder’s investment of $2.
When Southern Phone was formed in 2002, under the Federal Government’s Networking the Nation scheme, Wollongong City Council acquired two shares – one ordinary share and another preference share.
Since its establishment, Southern Phone has returned $16.8 million to shareholders in dividends and community grants.
Wollongong Council has received $1.347 million in dividends which has been used in natural areas management and on-ground works.
However, no dividend was paid in 2019, with little prospect for a return to dividend payment to shareholders envisaged in the next few years.
The offer from AGL means Council would receive a fixed cash payment and special dividend returning approximately $875,000.
Southern Phone Managing Director, David Joss said given the shareholders are all local councils, the proposed acquisition by AGL presented a great opportunity for them to utilise the return to address priorities facing their local communities.
“Our company has grown to become one of the most successful providers of fixed line, mobile and Internet communications services across regional Australia.
“Our unique Local Government ownership structure has created a community focused business that has achieved great success.
“However, with the advent of the NBN the need for achieving a greater share of the market has significantly increased and the timing is now right for a new shareholding structure.”
AGL has committed to maintaining the Southern Phone brand and products, as well as the existing business operations and telecommunications services to our 100,000 customers, across regional Australia, and they will retain the Southern Phone team.
AGL Chief Executive Officer and Managing Director, Brett Redman, said, “We are focused on responding to our customers’ evolving needs as we transform from a major energy retailer to a major, broader essential service provider.
“We believe the acquisition, as part of our broader strategy, will create significant value for our connected customers and also for our
shareholders.”
Southern Phone won the Regional Champion Award as part of Australian Communications Consumer Action Network’s (ACCAN) 10 Year Anniversary Awards, in recognition of its role as a telco focused on supporting the phone and internet needs of regional Australians.
