Singtel's NCS acquires Australia digital services company ARQ Group for A$290m

SINGTEL'S technology services arm NCS has acquired a digital services company in Australia, ARQ Group, for A$290 million (S$296.8 million), as part of its regionalisation plans, it said on Monday (Mar 28).

ARQ is a Melbourne-based digital consultancy group specialising in mobile applications, cloud and data analytics. The acquisition will be NCS's fourth in Australia in the past 15 months.

NCS had previously acquired IT company The Dialog Group and cloud consultancy Riley, and made a majority investment in cloud transformation specialist Eighty20 Solutions.

Ng Kuo Pin, chief executive of NCS, said the deal ramps up the company's presence in a market that is "critical to our regional expansion".

Ng said: "Taken together, our 4 investments to date have given us the necessary scale, capabilities and credibility to compete as a regional digital powerhouse as we help governments and enterprises in Singapore and Australia achieve their digital transformation goals."

The deal will also scale up NCS Next - NCS's digital innovation and services arm - in Australia, as it now offers an end-to-end digital transformation value proposition for clients.

The transaction price comprises A$265 million to be paid out in cash once the acquisition is completed, and deferred consideration and earn-out amount of A$25 million payable in tranches over a period of 3 years after the completion.

NCS noted that ARQ is one of the largest fast-growing digital services providers in Australia, and it has a strong client coverage and serves half of the Australian Securities Exchange's top 20 companies across the financial services, utilities, retail, healthcare, travel and government sectors.

It expects ARQ's revenue will increase 38 per cent on year to A$118 million by the end of 2022, while its earnings before interest, taxes, depreciation and amortisation is projected to increase to A$18.4 million.

Post acquisition, ARQ's 560-strong team will increase NCS's headcount in Australia to 1,900.

The acquisition is subject to regulatory approvals and is expected to be completed by May 2022.

Shares of Singtel were down S$0.01 or 0.4 per cent at S$2.64 at 1.11 pm on Monday.

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