Vocus and Amcom will become third largest telecommunicatons company after the two small players agreed to become one.

Together they have a market capitalisation of more than $1 billion, putting them behind Telstra and Optus.

In October Vocus Communications bought a 10% stake in Perth-based Amcom Teleommunications, a residential broadband service provider.

Since then the two have been inspecting each other’s finances.

According to Vocus CEO James Spenceley: “The assets and operations of Vocus and Amcom are highly complementary and the potential combination offers an enhanced growth platform, while creating a truly national player to capitalise on the evolving opportunities in the telecommunications sector.”

The deal, worth about $650 million, to will see Vocus acquire the outstanding 90% of shares in Amcom it doesn’t own, paying for the purchase in its own stock.

Shares in Vocus last traded at $5.71 and Amcom $2.36.

Amcom posted a net profit of $23.2 million in the year to the end of June on the back of revenue of $170.4 million. Vocus posted an underlying net profit of $13.6 million on revenue of $92.3 million.

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