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Highlights
- Strategic Expansion: The acquisition of STARFACE strengthens Gamma's position in Germany, Europe's largest cloud PBX market.
- Growth Potential: The deal adds 210,000 cloud PBX seats, bringing Gamma’s total cloud seat count in Germany to over 500,000.
- Financial Terms: STARFACE is acquired for €196 million, with funding primarily from existing cash reserves and a new debt facility.
Gamma Communications plc (LSE:GAMA), a leading European provider of technology-driven communication services, has reached an agreement to acquire SF Technologies Holding GmbH, trading as STARFACE, for €196 million (£165 million), subject to regulatory clearance expected within two months. The acquisition marks a pivotal step in Gamma’s strategy to solidify its position as a leading challenger to German telecom giants Deutsche Telekom and Vodafone in the cloud communications sector.
Expansion in Germany’s Growing Cloud PBX Market
Germany is a key focus for Gamma, as the country represents the largest cloud PBX market in Europe, with considerable growth potential, especially within the SME sector. Cloud penetration in Germany remains significantly lower than in the UK, presenting an attractive opportunity for expansion.
With this acquisition, Gamma aims to strengthen its presence in Germany, complementing its previous acquisitions, including HFO in 2020 and Placetel in 2024. Through these acquisitions, Gamma has established a firm foothold in the German cloud market, with STARFACE set to become a central component of the company’s growth strategy in the region.
STARFACE: A Key Player in Germany’s SME Cloud Communications Market
Founded in 2005 and headquartered in Karlsruhe, STARFACE is a leader in business communication and collaboration software tailored for the German market. The company primarily serves SME clients, along with enterprises and public sector organizations, through its extensive channel partner network that also covers Austria and Switzerland. STARFACE employs approximately 260 people and is led by founder Florian Buzin, who will continue to oversee the company post-acquisition.
The acquisition of STARFACE will significantly enhance Gamma’s position in the German SME cloud communications market, adding 210,000 cloud PBX seats to Gamma’s existing portfolio. This brings Gamma’s total number of cloud PBX seats in Germany to over 500,000, a notable milestone, as Germany is still developing its cloud communications landscape.
STARFACE’s expertise in transitioning businesses from on-premise SIP PBX solutions to cloud services will also complement Gamma’s existing offerings, further expanding its capabilities in the German market.
Financial Terms and Funding
The €196 million purchase price will be funded primarily from Gamma’s existing cash resources of approximately £125 million, with the remaining £40 million to be financed through a £130 million multicurrency Revolving Credit Facility. The debt facility, which has a three-year term with a possible 12-month extension, will provide additional capital for future uses, aligning with Gamma’s balanced approach to capital allocation.
STARFACE’s Strong Financial Performance
For the year ending 31 December 2024, STARFACE is expected to deliver €44 million in revenue and an Adjusted EBITDA of €15 million, reflecting its strong growth trajectory. The business has experienced a high single-digit Compound Annual Growth Rate (CAGR) for EBITDA from FY22 to expected FY24. Additionally, recurring revenues accounted for approximately 70% of STARFACE's total revenue in 2024, aligning with Gamma’s focus on transitioning to a recurring SaaS model.
Gamma expects the acquisition to be accretive to its Adjusted EPS in FY25, with plans for increased near-term investment to accelerate customer transition and integration.
Looking Ahead: Integration and Future Growth
The acquisition of STARFACE is expected to deliver a significant boost to Gamma’s cloud communications offerings in Germany. The deal will enhance Gamma’s existing distribution network, supported by STARFACE’s 2,000+ channel partners, and drive organic growth through expanded customer reach.
