ADT.L Regulatory News (ADT)

6 Dec 2007 12:32

AdEPT Telecom plc06 December 2007 AdEPT Telecom plc AdEPT Telecom plc announces a 3 year agreement with The CarphoneWarehouse Group ("CPW") and the £6.4 million acquisition of Telecom Direct Limited AdEPT Telecom plc ("AdEPT" or "the Company"), a leading independent provider ofaward-winning telecommunications services for landline calls, line rental andbroadband is pleased to announce: •A new three year agreement with Opal Telecom ("Opal", the B2B division of "CPW") to migrate AdEPT customers onto their 21st Century Network generating the associated cost and technological benefits; and •A substantial acquisition of fixed line reseller Telecom Direct Limited ("Telecom Direct") which for the 12 months to March 2007 generated revenues of £13 million in the 12 months to 31 March 2007. As a result, AdEPT has become one of the UK's largest fixed line resellers. AdEPT separately announces its interim results today for the six months ended 30September 2007. Roger Wilson, Chairman of AdEPT said: "Today's announcement marks a stepchange in the size and future potential of our business. The acquisition ofTelecom Direct will increase the turnover of the business by 60% and we expectthe deal to be significantly earnings enhancing over the medium term. We arealso delighted that the founder of Telecom Direct, Dave Stretch, is remainingwith AdEPT to run the Telecom Direct division." Dave Stretch, Director of Telecom Direct said, "I believe that thestrength and experience of AdEPT will bring significant benefits to ourcustomers and channel partners. I am looking forward to working with the AdEPTteam and continuing to expand the enlarged business." Opal Telecom Agreement AdEPT and Opal have entered into a three year deal which will provide AdEPT'scustomers with calls, line rental and broadband services and facilitate theintroduction of a range of new converged products. During the next 12 months, AdEPT intends to migrate a substantial proportion of its customers to the 21stCentury Network which is based on Local Loop Unbundling technology that has been adopted by Opal and CPW. AdEPT will become one of the first major telecom resellers to move tothe 21st Century Network. The agreement will generate immediate savings,including the "bundling" of fixed line and broadband services together, in a waythat was not possible using conventional technology. The ability to providebundled packages has been shown to have multiple benefits in increasingcustomer satisfaction, increasing average revenue per customer, and reducingchurn. The telecoms industry is united in its belief that convergence of voiceand data traffic over IP-based Next Generation Networks represents the future. This agreement ensures AdEPT is positioned to provide its rapidly expanding customer base with new technologies as they develop, such as SIP, videoconferencing, IPTV and virtual office technology. David Goldie, COO of CPW's Telecoms Division said "We are delighted tohave entered into an agreement with AdEPT, one of the largest and mostprogressive UK resellers. CPW has invested £200m in building its new networkbased on Local Loop Unbundling in over 1,400 exchanges to date, which coversmore than 70% of the UK business population. We believe this investmentpositions us, and AdEPT Telecom, to take advantage of the available commercialand technological opportunities." Acquisition of Telecom Direct Limited AdEPT is acquiring Telecom Direct, one of the oldest independent fixedline telecom resellers in the UK, established in 1997. The acquisition followsthe Company's core strategy of acting as a consolidator of the highly fragmented fixed line business market. Telecom Direct represents a natural fitwith AdEPT as it operates a very similar model and customer base and shouldimmediately benefit from the introduction of AdEPT's automated back office systems. Telecom Direct currently provides voice telephone services to 5,500business customers. In the year to 31 March 2007, Telecom Direct generatedrevenues of £13 million and profits before tax of £0.2 million. The acquisitionwill therefore increase AdEPT's turnover by over 60% per annum, making theCompany one of the largest fixed-line resellers in the UK. The consideration payable by AdEPT is subject to performance criteria. We arecurrently estimating a total payment of £6.4 million, to be satisfied by a cashpayment of £5 million on completion, £0.4 million payable six months following completion, and the balance of £1 million payable after 12 months. As the finalamount paid is subject to future operational and financial criteria the actualamount may be more or less than this. The total consideration will be fundedby a mixture of cash and bank debt. Commenting on the acquisition, Roger Wilson, Chairman of AdEPT, said, "This is avery significant transaction as it has immediately changed the scale of thebusiness and led to our ability to reach an agreement with CPW. We expect the deal to be significantly earnings enhancing over the medium term." Enquiries AdEPT Telecom Roger Wilson Tel: 07786 111 535 Chairman Strand Partners Simon Raggett Tel: 020 7409 3494 Warren Pearce Cardew Group Tim Robertson Tel: 020 7930 0777 Shan Shan Willenbrock This information is provided by RNS The company news service from the London Stock Exchange