Gamma Communications Regulatory News (GAMA)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

18 February 2020

Gamma Communications plc

Offer to acquire VOZTELECOM OIGAA360, S.A - a leading provider of IP telephony services in Spain 

Gamma Communications plc ("Gamma"), a leading technology-based provider of communications services to the business markets in the UK and the Netherlands, is pleased to announce that its wholly-owned subsidiary, Gamma Communications Europe B.V., has made an offer to acquire the entire issued and to be issued share capital of VOZTELECOM OIGAA360, S.A ("VozTelecom") (the "Offer").

VozTelecom is admitted to trading on the Mercado Alternativo Bursátil in Spain. Accordingly, the Offer will be implemented by means of a takeover offer under the relevant Spanish legislation.

The Offer values the entire issued and to be issued ordinary share capital of VozTelecom at approximately €25.3 million (£21.0 million) on a fully diluted basis. The cash consideration payable pursuant to the Offer will be financed from the Gamma group's existing cash resource (which was £53.8 million as at 31 December 2019). VozTelecom's net debt at 31 December (adjusted for convertible bonds) was approximately €5.2m which would imply an enterprise value of c€30.5 million (c£25.3 million).

Full details of the Offer can be found here:

https://www.bolsasymercados.es/mab/documentos/HechosRelev/2020/02/05156_HRelev_20200218.pdf

Background information

VozTelecom is one of the leading Cloud PBX providers in Spain with c40,000 seats which equates to a market share of 5% and is the largest Cloud PBX business aside from the major fixed line and mobile network operators. VozTelecom provides service to end users directly and through a network of wholesale partners, franchisees and dealers. Like Gamma, VozTelecom has an excellent reputation for delivery through a well-established partner channel.

As part of its stated European expansion strategy, Gamma has identified Spain as one of its key target geographies. With an overall market size of c. 18 million PBX seats (slightly smaller than the UK market) and a cloud penetration of only c. 5%, the Spanish market for Cloud PBX is forecast to grow rapidly in the future.

Gamma believes that it can bring its deep expertise and commercial strength to both support and help accelerate VozTelecom's growth in the emerging Cloud PBX market in Spain.

VozTelecom has also recently acquired ComyMedia (an IT and communications provider targeting the Enterprise sector) in July 2019 and Nethits (a provider of facility services for call centres and also business communications to SMEs) in December 2019.

VozTelecom's most recent trading update including unaudited results for the financial year ended 31 December 2019 can be found here:

https://www.bolsasymercados.es/mab/documentos/HechosRelev/2020/02/05156_HRelev_20200218_2.pdf

The VozTelecom financial results have been prepared in accordance with the Codigo de Comercio and the Plan General de Contabilidad.

As set out in the VozTelecom trading update, the unaudited 2019 pro forma group Turnover, including an annualised contribution from both ComyMedia and Nethits, was €15.6million (£13.0million) and EBITDA on the same proforma basis was €2.5 million (£2.1 million).

Given the size of the VozTelecom business, the acquisition does not constitute a substantial transaction for Gamma in accordance with the AIM Rules for Companies.