ENERGIS, the UK's largest carrier of Internet traffic and telecoms supplier to Dixons' Freeserve, announced yesterday it had agreed to acquire the entire share capital of Zurich-based group Unisource Carrier Services (UCS) for pounds 60m in cash. The acquisition, Energis's first outside the UK, will be funded from the proceeds of a pounds 250m high-yield bond issued by the company in May.
Mike Grabiner, Energis chief executive, said the purchase was part of the company's entry strategy into the profitable European telecoms market, which accounts for 31 per cent of a pounds 438bn global market.
"For us it's a good deal," he said. "It puts in place for use a pan-European network so we can compete more effectively in UK-originated business, about half of which goes into Europe."
The company plans to spend pounds 50m this financial year to expand UCS's network and hopes in time to market its services directly to European firms.
Mr Grabiner said he expected the acquisition to add pounds 35m to Energis's revenues this year and more than pounds 100m in 2000. He said the purchase would be "marginally diluting" at cash flow level in the first year.
UCS is a subsidiary of Unisource, a joint venture of Swisscom and former Dutch and Swedish monopolies KPN and Telia. It carries voice and Internet traffic for 70 phone companies and Internet service providers across Europe.
In the first half of 1999, UCS had sales of pounds 27m and a loss before interest, tax, depreciation and amortisation of pounds 7m.
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