Cable & Wireless (C&W) has acquired the UK and Irish operations of Energis in a transaction that will work out at €914.6m. The deal, when completed, will automatically propel C&W into the position of third largest telecoms operator in the Irish market.
Under the terms of the agreement, C&W will acquire the entire issued share capital of Chelys (Energis’ trading name). Energis will be acquired on a debt and cash free basis – save for Energis’ finance lease obligations of approximately £37m sterling – for an initial cash consideration of £594m sterling.
On completion, C&W will inject £35m sterling in cash, which is expected to be recovered within the first year after completion, to meet Energis’ short-term working capital requirements. The transaction will be subject to approval from the UK Office of Fair Trading.
C&W group CEO Francesco Caio commenting on the acquisition said: “The acquisition of Energis is a further step in the development of C&W in the UK and will accelerate the strategic transformation that we have undertaken in the past 15 months.
“The integration of the two businesses will deliver good cost and capital expenditure synergies, and add blue-chip customers to our existing base in the large corporate segment. Importantly, it will also create a stronger player with the scale needed to succeed in the increasingly competitive telecoms industry.
“The timing of this acquisition allows us to exploit the rapid growth in demand for internet protocol-based services and the opportunity presented by the creation of a regulatory framework designed to facilitate infrastructure-based competition. For these reasons, the acquisition makes both financial and strategic sense,” Caio said.
Sources within the telecoms industry suggest the amalgamation of C&W operations with Energis will create a meaningful force in the Irish telecoms market. Energis already claims to be the third largest operator in the Irish market after BT Ireland and C&W has a significant IP and PBX voice and data business allied with significant international IP connectivity. In recent weeks its local operations introduced voice services to the SME and corporate market and signalled possible mobile virtual network operator market strategies.
Access to IP connectivity makes strategic sense for Energis in the Irish and UK markets. In June Energis’ Irish operations reported a flat year with revenues standing at €43m, due to narrowband internet customers migrating to broadband faster than the company had anticipated. Its parent company in the UK reported a £25m sterling (€37m) drop in its overall sales to £745m sterling in the year.
By John Kennedy