Energis pays pounds 352m for Dutch telco

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The Independent Online
ENERGIS, THE upstart telecoms network operator, yesterday fitted a second piece of its pan-European strategy into place with the purchase, for pounds 352m, of EnerTel, the second largest fixed-line provider in the Netherlands' .

The deal helps to restore momentum to Energis' development following its failure last month to pick up Racal Telecom, which was snapped up by Global Crossing for pounds 1bn.

Investors applauded the Dutch move, boosting Energis' share price by 51p to 2,200p, even though the company increased its share base by about 5 per cent to help fund the purchase. The issue was priced last night at 2,125p a share, a 3.4 per cent discount to yesterday's close, after an accelerated bookbuilding exercise led by Dresdner Kleinwort Benson which raised pounds 312m.

"It will make us the leading alternative telecom operator in Holland, one of the most dynamic markets and a European hub," Mike Grabiner, Energis' chief executive, said.

Energis, in which National Grid retains a controlling interest, will buy the unit from Worldport Communications, a US group. It is selling EnerTel after just 16 months, but will book a profit of about pounds 285m on its investment.

EnerTel has a 1,200km fixed-line network linking the Netherlands' larger cities, including Utrecht and Eindhoven. It also has two switches in Amsterdam and Rotterdam. The deal with Energis includes two further switches in London and New York. In the first nine months of the year, EnerTel reported pre-tax earnings of pounds 1.3m on turnover of pounds 28m.

Energis' first foray into mainland Europe came in August when it bought Unisource Carrier Services (UCS), which has a 12,000km network across 11 countries.

EnerTel "will significantly expand the territory in which we can offer end-to-end, advanced data IP and Internet services to business customers and leverage our recent UCS acquisition," Mr Grabiner said.

Analysts said that the move would help Energis to expand its customer base and boost the potential of the UCS assets, describing it as a "handy bolt-on acquisition". Mr Grabiner said that the company would continue to search for further European acquisitions, with a focus on corporate clients. Yesterday's gain took Energis' advance this year to 64 per cent.