Fibernet soars on foreign bid approach

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Fibernet is the latest UK telecoms company to attract interest from a large foreign bidder, revealing yesterday that an unnamed suitor, possibly Global Crossing or AT&T, has approached the company.

Shares in the telecoms player rose more than 30 per cent in frenetic trading.

The approach is the latest in a string of UK telecoms deals over the past two years in both the fixed and mobile telecoms markets. Mobile players such as O2 and Virgin Mobile have been snapped up while the likes of Kingston Communications and Cable & Wireless have been the subject of private equity interest. With broadband internet demand soaring over the past year, attention has turned to companies that own network infrastructure, with Easynet and Be Internet recently taken over.

Fibernet is a niche player that specialises in providing network services to corporate customers and internet service providers. The Basingstoke-based company said the approach contained a number of conditions and it could provide no certainty that a deal would eventuate. Shares soared 35 per cent to 52.5p as a result.

Reports suggested that a US company has approached Fibernet and a price of 70p a share has been suggested. At that level, a deal would be worth about £43m. Fibernet shares have declined 40 per cent this year.

Analysts pointed to Global Crossing as a potential bidder, given its similar business model. The US company provides data and internet services to multinational customers and Fibernet is seen as a good fit. AT&T, a US telecoms company that uses Fibernet as a network supplier in the UK, has also been mentioned as a potential buyer.

Fibernet is a well-regarded company that had a cash balance of £10.4m at the end of the third quarter. Its order intake improved to £12.1m in the third quarter but the correction of an accounting error led the company to state that it would miss market expectations for full-year profitability. It counts the pharmaceutical company GlaxoSmithKline, investment bank Credit Suisse and the Co-Operative Bank among its customers, as well as customers that resell its internet capacity such as Claranet and Equant.