Imagine paying EUR40m for Irish Broadband

30-04-2008

by Ciara O'Brien

Telecoms provider Imagine has snapped up Irish Broadband in an overall cash-and-shares deal valued at EUR47 million.

Imagine shelled out EUR40 million for the broadband firm in cash and shares. As part of the agreement former Irish Broadband owners NTR and Kilsaran Concrete will take a 25 percent stake in Imagine, and pledged to invest a further EUR7 million in Irish Broadband.

According to Imagine, the acquisition of Irish Broadband pushes the value of the group up to EUR187 million. The deal gives Imagine even greater reach into the Irish telecoms market, with the company claiming a 12 percent share of the SME market with 15,000 business customers, a 10 percent share of the broadband market with more than 80,000 customers, and 115,000 residential phone customers -- 5 percent of the market.

Imagine said the acquisition is on a debt-free basis. Irish Broadband has hit some difficulty in recent times as it invested heavily in its expanding network, recording multimillion-euro losses.

The move is strategic one for Imagine, which will gain substantial network and spectrum assets. It could also mean relief for potential broadband customers -- Imagine chairman Sean Bolger said his company had been contacted by a significant number of customers to whom they could not provide broadband services to as DSL was not available in their areas. The acquisition of Irish Broadband's wireless network could allow Imagine to become more flexible and offer services to these areas.

"It's significant in terms of our strategic position," said Bolger, speaking with ENN. "We can reach areas where DSL is not available. It allows us to fill in those spaces."

Looking ahead, Imagine may also be able to capitalise on Irish Broadband's infrastructure in the WiMAX arena, which will allow next generation voice and data services to be offered to business and residential customers across Ireland.

"We've been tracking WiMAX development for the past two years," he explained. "We see it as a major development in terms of convergence between mobile and fixed services."

The company refused to be drawn on whether the deal would mean job losses as the two firms were consolidated. However, Bolger did tell ENN there would be streamlining across the whole group, as part of Imagine's policy to continuously assess its operations. There is, as yet, no particular plan to cut jobs in Irish Broadband, he said.

The acquisition of Irish Broadband follows the recent trend of consolidation seen in the Irish telecoms market as businesses struggle to gain a competitive edge. Fixed line and broadband provider Eircom bought mobile phone operator Meteor in 2005 after the telecoms regulator cleared the deal. Meanwhile, Vodafone recently acquired telecoms provider Perlico for EUR80 million, bringing fixed line and broadband services to its product portfolio.