# ST1 - Spirit Technology Solutions



## System (23 July 2013)

On July 23rd, 2013, Transol Corporation Limited (TNC) changed its name to Arunta Resources Limited (AJR).

Previous discussion of this company can be found in the TNC thread: https://www.aussiestockforums.com/forums/showthread.php?t=4892


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## System (23 June 2016)

On June 23rd, 2016, Arunta Resources Limited (AJR) changed its name and ASX code to Spirit Telecom Limited (ST1).


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## Mr Bear (13 July 2018)

Disclosure - I own this stock..

Thought I’d add a brief comment on ST1, Peter Diamond has taken a roughly $8m stake, this guy knows what he’s doing and has done amazingly well investing in startups including iiNet. They offer a very competitive and profitable network with solid growth.


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## So_Cynical (19 August 2018)

A mixed bag of reviews - i doubt any ISP would rate much higher as its a fickle industry.

https://www.productreview.com.au/p/spirit.html


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## Ann (24 May 2019)

This stock has had a number of names over the years....
SPIRIT TELECOM LIMITED 23/06/2016 
ARUNTA RESOURCES LIMITED 23/07/2013 - 23/06/2016
TRANSOL CORPORATION LIMITED 27/08/2003 - 23/07/2013
ONLINE TRADING SYSTEMS LIMITED 27/08/2003 
The chart goes back to 1999 but I can't find what it was back then. I really don't like these born again companies they have history dragging after them.
There was some news today which should have sent the price upward but it fell 11.77% as I write...
*Spirit Telecom to deliver ‘the internet Australia deserves’ with Morwell next on delivery list*

_Internet service provider Spirit Telecom (ASX: ST1) has struck a $1.1 million deal with the Victorian State Government that will deliver fast 5G-enabled internet in rural Victoria.


Through the new deal Spirit has secured $2.8 million in state government contracts over the past 12 months.


5G aims to usher in a new era of wireless telecommunications that will facilitate economic opportunities and set the stage for a futuristic modern society.


The new contract means Spirit will provide 5G connectivity to Victorian regional town Morwell with Spirit saying it is “thrilled” to be delivering super-fast internet in the region. More.._


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## greggles (27 May 2019)

Solid three month uptrend in place. ST1 up another 11.11% to 20c today and is now back to where it was eight months ago.


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## peter2 (29 May 2019)

We know the movie misquote, "If you build it they (he) will come". 
If Spirit builds a faster ISP than the NBN and it's available to me, I'll dump the NBN service quicker than it's crappy upload speed.  

Telstra 5G or Spirit I don't care. All I want is speed and reliability. Will be keeping an eye on ST1.


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## peter2 (21 June 2019)

Hello Spirit, we have lift off and I didn't put this one in the public 40pos portfolio.


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## Dona Ferentes (12 April 2020)

peter2 said:


> Hello Spirit, we have lift off...



Just about called the top, there, @peter2 


ST1 is a tele-communications company which provides Internet, cloud solutions, telephony services and Phone Names in Sydney, Melbourne and Brisbane and the Gold Coast.

Probably struggling to gain relevance, although it has been a serial acquirer of late
May '19 : Link One Group
May '19 : Building Connect
July '19 : Arinda IT
July '19 : Phoenix Austec Group
(Sept - management changes)
Feb '20 : Cloud Business Technology
Feb '20 : Trident & Neptune Group

As you'd expect, capital raisings and share allocations aplenty over that time, and now in a trading halt for more capital







> Small cap telecommunications provider Spirit Telecom is on the hunt for fresh equity to help fund its purchase of more telco and IT services businesses. .... out looking for as much as $10 million on Thursday through a two-tranche placement. The first tranche of 78.8 million new shares and the second, conditional placement of 12.2 million shares, according to terms sent to funds.
> 
> ... priced at 11¢ a share, a 21.4 per cent discount to Spirit's 14¢ last close and an 18.4 per cent discount to its five-day VWAP. Shaw and Partners was lead manager and underwriter on the offer.





> Funds were told the money raised would be used to strengthen the company's balance sheet to take advantage of potential acquisition opportunities. The company is in the process of completing due diligence on two potential targets and is assessing other opportunities on companies that have revenues up to the $30-odd million mark.


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## chiff (15 April 2020)

If I understand correctly-no share offer at 11cents for retail investors?


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## Dona Ferentes (15 April 2020)

chiff said:


> If I understand correctly-no share offer at 11cents for retail investors?



Spirit successfully raises $9.2M in a strongly supported capital raising, which comprises an unconditional placement of approximately $8.662M to professional and sophisticated Investors and Conditional Placement to Directors, Founders and Employees of approximately $0.5M (subject to shareholder approval.

_- get to share the downside, but not the upside?

But sometimes a SPP comes along down the track. Contact the company and express displeasure?_


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## chiff (16 April 2020)

Dona Ferentes said:


> Spirit successfully raises $9.2M in a strongly supported capital raising, which comprises an unconditional placement of approximately $8.662M to professional and sophisticated Investors and Conditional Placement to Directors, Founders and Employees of approximately $0.5M (subject to shareholder approval.
> 
> _- get to share the downside, but not the upside?
> 
> But sometimes a SPP comes along down the track. Contact the company and express displeasure?_



No SPP for retail shareholders ...was said by CEO it would be too risky with acquisitions in play -takeovers etc and may act against the company.....over my head!


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## System (14 May 2020)

Spirit Telecom targets low-risk high volume growth sectors


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## Dona Ferentes (14 May 2020)

April 2020: 
• Very healthy monthly April 20 result with total revenue of $4.0M in a highly challenging macro environment. 
• Recurring revenue across the group for April up to $2.3M. 
• Solutions & Project revenue at $1.7M for April. 

Jan-April 2020 vs Jan-April 2019: 
• Total revenue growth up 146% to $14.3M and B2B revenue growth up 216% to $12.4M. 
• Recurring revenue growth up 60% to $8.6M and B2B recurring revenue growth up 92% to $7.0M. 
• Solutions & Project revenue growth up to $5.7M


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## Dona Ferentes (18 August 2020)

Spirit is looking to raise $18 million in a placement of new shares and up to another $5 million from existing investors via a share purchase plan.



> Funds raised would be used to buy a handful of small internet service providers. It is understood Spirit has agreed to pay $6 million cash and issue scrip worth $2 million for three IT services companies on Australia's east coast, leaving $4 million for marketing and investment and $11 million for future deals.




The raising was at 32¢ a share, which was a 13.5 per cent discount to the last close of 37¢.


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## Dona Ferentes (20 August 2020)

Spirit Solutions Partners (the Company’s newly created wholesale division)  has made _three acquisitions in Australia’s largest Telco and IT market (NSW).  These companies are highly complementary to Spirit’s IT services business, providing Managed Services, Voice, Cyber-Security and Cloud-Based solutions_.

1. Reliance IT, a Cloud Managed Services Provider based in Central NSW and one of the largest providers of IT services in regional NSW; 
2. Beachhead Group, a Sydney based IT Managed Services Provider, specialising in Cloud and Infrastructure deployment to businesses and private schools; and 
3. Altitude IT, a Sydney based IT Managed Services Provider with a diverse base of recurring revenue across the commercial & industrial sectors.

Along with the VPD acquisition, by July the Spirit Wholesaler & Reseller Channel has expanded and *Spirit Solution Partners *created. ST1 is morphing from a telco servicing small enterprises to an IT company, with target market including Industrial parks, offices, educational, health, aged care and mining entities, and providing:
High Speed Internet
IT Support
Security
Voice/Telephone
Cloud Storage.


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## Dona Ferentes (25 August 2020)

• FY20 revenue up 100% to $34.9M, marking a transformative year for Spirit. 
• Underlying EBITDA* up 88% on FY19 to $3.73M, at the upper end of guidance range. 
• Recurring revenue made up 67% of portfolio ($23.5M over $34.9M). 
• B2B revenue growth of 147% to $28.9M on FY19; total recurring revenue up 48% to $23.5M on FY19. 
• Balance sheet with $14M of cash and available debt as of June 30.


Outlook :
*ORGANIC*
1. Current revenue rate is circa $80.0M 
2. National marketing launch of Spirit Sydney, Melbourne and Brisbane in Q1-Q3. 
3. NSW expansion via acquisitions & 300 active Spirit Solution Partners & resellers in Spirit X by Dec 20. 
4. VPD Acquisition has performed strongly in July 20. 
5. Identify $1.5M in additional Opex synergies across acquisitions.

*M & A*
1. Total current balance sheet capital availability at $36.0M (Assumes SPP fully subscribed at $5.0M). 
2. At negotiation stages with multiple vendors / sellers. 
3. Current acquisition targets identified; have >$35M in annuity based revenue.

*2020-21 ST1 TARGET*
1. Build scale via organic + M&A.  
2. Circa +$85M Revenue run rate target by CY Dec 20. 
3. 15% Normalised EBITDA run rate at end of FY21.


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## System (21 October 2020)

On October 13th, 2020, Spirit Telecom Limited changed its name to Spirit Technology Solutions Ltd.


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## Dona Ferentes (3 December 2020)

System said:


> On October 13th, 2020, Spirit Telecom Limited changed its name to *Spirit Technology Solutions* Ltd.



in the modern shift away from pure telco service provider to a more integrated tech model, there has been the  company name change. At least the code doesn't change, as it is a shift of emphasis, rather than  a totally new direction (and the underlying assumption that previous attempt had failed). It is all about Voice, Data and Cloud (not necessarily in that order), and sectioning the market: Domestic, Small-Medium Business, Corporate, and Government.

But, some things remain the same. New Acquisition

*Intalock Acquisition 
Key Details:*
• Acquisition of Intalock, one of Australia’s leading *cyber security services businesses* with a market leading and sophisticated full Security Operations Centre (SOC) for $15.0M upfront consideration.
• Allows Spirit to cross sell and deliver highly secure bundled Cyber Security Services with Data, Cloud and Voice.
• Comprehensive Cyber Security offering, with blue chip customer portfolio across Corporate and Government – in line with Spirit’s market expansion strategy for FY21 into Corporate markets.
• Intalock generated revenue of $23.6M and normalised EBITDA of $2.3M in FY20.
• Upfront consideration of $15.0M paid as a combination of cash (85%) and Spirit equity (15%) with a deferred consideration component. An additional earn-out consideration component is also available for out-performance in FY22 capped to maximum total transaction value of $22.5M.
• Transaction EBITDA multiple of x6.5.
• Cash component will be paid from cash reserves and CBA debt facility.


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## Dona Ferentes (3 December 2020)

*Commercial Update: *
• Record growth continues, as Spirit builds out a scalable and high growth IT & Telco company across SMB, Essential Services and now Corporate & Govt. 
• Spirit generated revenue of $6.5M in October, up 16% on September and 196% YOY from $2.2M. 
• Record November Sales / Total contract value was $6.9.M (recurring), up 166% MOM and up 565% YOY, with pending installations at $2.8M and IT Services & Technology Sales at $12.1M. 
• Large new business wins drove the record sales results with Cloud, Voice and Data products being sold in bundles across Health, Education and Corporate Segments.


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## Dona Ferentes (22 January 2021)

Record growth in Q2 21 & H1 21 across all key financial indicators (unaudited):  
• Total revenue for the half was $42.7M, up 243% year on year (YoY). 
• Total revenue for the quarter was $27.1M, up 338% year on year (YoY) and 73% on Q1 21.
• Q2 21 recurring revenue up 116% YoY to $11.5M and S&P** revenue up 1,768% YoY to $15.6M.
• H1 21 Underlying EBITDA* in the range of $4.1M $4.4M (H1 20 was $1.6M).
• Positive Operating Cashflow for H1 FY21 of $4.3M.
• Healthy balance sheet with $23.3M of cash and available debt as of 31 December 2020.
• Acquisition integrations ahead of schedule.


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## Dona Ferentes (18 March 2021)

The company today announced its intention to _divest _its *consumer infrastructure assets*.  

_Spirit’s consumer division provides high-speed internet to thousands of residential customers, primarily in large apartment buildings across Melbourne, Brisbane and Gold Coast.   The consumer network and infrastructure assets are in 97 buildings, with access to over ~18,300 possible connections. Spirit has built a dedicated switched ethernet network in these buildings to deliver end-user speeds of up to 1 gigabit, providing a robust connection that any mixed copper model is unable to compete with - at highly competitive pricing. High profile buildings include Eureka Tower, Freshwater Place, Yarra’s Edge complex, Central Equities cluster – Southbank Melbourne and Queensland’s largest residential building Southport Central. The divestment is in line with Spirit’s shift to focus on the business market, from SME to large enterprise. The Consumer assets now account for a small amount of Spirit’s revenue compared to its B2B portfolio of assets.  _



> _“As Spirit has evolved to a large integrated IT and telecommunications provider, it is in line with our strategy to divest the consumer assets, which are no longer core to our strategy. Proceeds from the divestment will be used to continue to acquire high growth assets across cyber security, cloud and IT services, which are in high demand within our B2B customer base,”  “These assets are unique, given the limited competitors servicing these types of residential buildings nationally. We see this divestment returning a material sum of capital to our balance sheet. Additionally, we’ve already had strong interest with several parties enquiring about acquiring these infrastructure and customer assets.” said Sol Lukatsky, Managing Director. _




another twist on the consolidation likely to occur in the Tier 2 telco/ ICT space.


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## Dona Ferentes (29 March 2021)

> in a Trading halt in relation to a material acquisition and a capital raising



Interesting  ... pushed or shoved?

If they are selling the Consumer Infrastructure assets (mainly apartment block fibre), and now a bigger fish comes along, what's the story? A _must do _acquisition SME or large enterprise, too juicy to refuse, or finding it hard to sell the Retail side.

I did notice, as an aside, Spirit spent a lot of money getting involved (sponsoring, ensuring high speed access) with _The Block_. Would it be fair to say that was unspectacular as a promotion, seeing they are quitting that sector?


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## Dona Ferentes (29 March 2021)

Spirit Technology Solutions is _readying a $24 million capital raise to buy telecommunications equipment outfit Nexgen, which is two businesses, one called Nexgen and the other name Business Telecom, and sells a range of data, security and voice products, like  phone systems and conferencing units._
_
The company was forecast to  generate between $7.2 million and $7.6 million earnings before interest,  tax, depreciation and amortisation in fiscal 2021, and the purchase  price implied a 6.5 times earnings multiple.

It is understood the purchase would double Spirit’s customer base to more than 10,500 small and medium enterprises.

Spirit  would fund the deals using a mix of 70 per cent cash, from the   capital raising and debt facility from CBA, and 30 per cent scrip,   which would come with a vendor performance earn out._


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## Dona Ferentes (31 March 2021)

Spirit has brought out the rationale for the Nexgen acquisition. Market tends to agree, and ST1 is up 7% today



> The acquisition brings over five thousand new clients, and one hundred new sales people to Spirit to drive organic growth, complementary products, scale and will generate an additional $36.0M in revenue with 80% of this as recurring revenue




The synergies look to come from Nexgen success in their systems, of gaining AND retaining clients successfully, with *cross selling* an attraction, of Nexgen now able to introduce a number of additional complementary products from Spirit including; _Microsoft Teams calling products,  Sell Internet/ Data products from Spirit X Platform, IT services, including Microsoft suite and cloud storage solutions, and IT peripherals_


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## Dona Ferentes (30 May 2021)

Accounting firm BDO is carrying out a formal sales process for Sprint's legacy consumer infrastructure business, which provides high-speed internet for thousands of residential customers in apartment buildings in Melbourne, Brisbane and the Gold Coast.

 A result is expected by the end of August.  CEO Sol Lukatsky says the market will determine the sales price, but notes that at least 20 parties have expressed interest in the   difficult-to-replicate assets.


> _The market for those consumer infrastructure plays is really hot_, he says. _The market will dictate the best price and we will take the  best price_.




Lukatsky says as many of Spirit's and Nexgen's customers have only one service, there's a big opportunity to increase this to two to three  offerings. Cross selling efforts will be bolstered when Nexgen starts selling Spirit's IT and cyber security products later this year.

 Lukatsky says Spirit "_would have gone backwards_" if it had remained  an internet only business, given the tumbling cost of data and the  difficulty of competing with the government subsidised NBN.


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## So_Cynical (30 December 2021)

Spirit Tech seems to be doing well, trading at close to a 36 week low but in general just long term cycling, business wise now focused on B2B with a comprehensive range of products/services to sell/cross sell, operationally profitable, seems to have reached critical mass and ready to really get going and build revenue.


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