Smart exits examinership, now in Digiweb stable

8 Dec 2009

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Fibre and DSL provider Smart Telecom has exited the examinership process with the High Court’s approval and will now become a fully owned entity within Digiweb, it emerged this afternoon.

As a result of the acquisition of Smart’s balance sheet, its assets and its entire business and residential customer base, Digiweb will now be one of Ireland’s largest independent telecoms and broadband providers.

Digiweb said this afternoon that the transaction brings together two EBITDA-positive businesses with annual revenues approaching €40 million and more than 150 employees.

Number of subscribers

The combined entity will have a total subscriber base of 46,500 business, residential, corporate and government customers for broadband, data and telephony, along with more than 48,000 web hosting, domain and data-centre clients.

Smart entered the examinership process on 31 August in order to restructure its balance sheet and to secure a strategic investment.

The proposals approved by the Court include a restructuring of Smart’s balance sheet and the acquisition of the entire business and residential customer base and assets of Smart by Digiweb, the national telecommunications and managed services provider.

Smart Telecom employees will move during December to Digiweb’s Blanchardstown head office. Smart will form part of the Digiweb Group and will retain the ‘Smart’ brand.

“Smart emerges with a substantially stronger balance sheet and operating profile,” said Smart chief financial officer Brendan Hunt.

“The business will be EBITDA positive and profitable and has no debt maturities for a number of years. The prospect of combining our existing business with Digiweb is exciting and we look forward to the opportunities this presents.

Smart background

In the early part of this decade, under the leadership of Oisin Fanning, Smart made a robust entrance to the Irish fixed-line marketplace, unbundling up to 40 local exchanges and signing up close to 50,000 fixed-line customers and 18,000 broadband customers.

Failure to pay a €4-million bill to Eircom in 2006 saw the incumbent cut off its fixed-line service and soon after it lost its status as preferred bidder for Ireland’s fourth 3G licence.

Takeover

Businessman Brendan Murtagh took over the company from founder Fanning after it racked up losses of €55.6 million.

Murtagh subsequently raised €39.5 million to repay creditors. However, the company incurred further trading losses and it became unlikely to achieve profitability and positive cash flow. Earlier this year it laid off 60 of its 90-strong workforce.

“We welcome the Smart employees to our team and, together with them, look forward to extending our combined market-leading services to a growing customer base across each of the residential, corporate and Government sectors of the market,” said Colm Piercy, chief executive of Digiweb.

“The combination of the Digiweb and Smart businesses makes the enlarged Digiweb Group a truly national telecommunications company, with the network, people and managed services capability to provide real choice in the Irish telecoms market.

“There are many advantages for our customers who will benefit from an increased range of telecoms, IT and hosting services, and a single solution provider for all their needs. We look forward to making an enhanced contribution to the competitive communications landscape in Ireland and to growing strongly together in business, consumer and public-sector markets,” Piercy said.

The transaction combines Smart’s leading fibre, high-speed DSL infrastructure and next-generation IP network with Digiweb’s national wireless infrastructure and leading data-centre and hosting facilities.

By John Kennedy

Photo: Colm Piercy, chief executive of Digiweb.

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com