19th Dec 2005 07:03
Carphone Warehouse Group PLC19 December 2005 19 December 2005 For immediate release The Carphone Warehouse Group PLC ("The Carphone Warehouse") The Carphone Warehouse to acquire Onetel The Carphone Warehouse announces that it has exchanged contracts with Centricaplc ("Centrica") to acquire the Onetel group of companies from Centrica, for aninitial cash consideration of £132.0m funded via an extension of existing debtfacilities. The acquisition will complete on 31 December 2005. £94.9m of theconsideration relates to the purchase of the residential and businessoperations, and £37.1m relates to an agreement under which Centrica will recruita certain number of customers for Carphone Warehouse through its British Gasoperations for the next three years. In addition, The Carphone Warehouse has agreed to pay Centrica up to a further£22.2m over the next three years if higher British Gas customer recruitmenttargets are met. About Onetel Onetel is one of the largest alternative telecoms providers in the UK, providinglandline calls, line rental, dial-up, broadband and mobile services toresidential and small business customers. Onetel currently has the followingapproximate residential customer numbers: • 1.1m carrier pre-select ("CPS"); • 250,000 indirect access; • 60,000 broadband; and • 40,000 mobile. In addition, there were 50,000 business CPS customers. In the year to December2004, revenues were £280m and the operating profit was £3.0m. In the six monthsto June 2005, revenues were £162m and the operating loss was £2.0m. Adjustednet liabilities at December 2004 were £77.1m, including an intercompany loan of£114.9m, and gross assets were £155.6m. Rationale for the acquisition Since launching TalkTalk in 2003, The Carphone Warehouse has been the fastestgrowing CPS service provider in the UK, building a customer base of 1.06m bySeptember 2005. Our goal is to become the number one alternative residential telecoms providerin the UK market. The acquisition of Onetel propels us clearly towards thatposition and gives us a substantial platform of profitable voice customers fromwhich to launch our drive into the broadband market in 2006. It also allows twomajor competitors to join forces in their bid to deliver improved value andservice to residential customers. We intend to rebrand Onetel's operations as TalkTalk and to give all of Onetel'sresidential customers the benefit of free on-network calls as quickly aspossible. In tandem with the acquisition of Tele2's UK business, also announcedtoday, we will then have a base of approximately 2.4m TalkTalk customers allcalling each other for free. As a fundamental part of the transaction, we have reached agreement withCentrica to use its British Gas distribution platform as a sales channel forTalkTalk for the next three years. We believe that this significantly enhancesthe value of the transaction for The Carphone Warehouse as it gives us access toa substantial new source of potential customers through a well-recognised andsuccessful channel. Onetel's 50,000 SME customers, and its broadband and data services expertiseacquired through its acquisition of Rednet earlier this year, will be integratedinto Opal's existing business operations, in line with Opal's strategy ofconsolidating the business reseller market and progressing its data offering. Financial impact The initial cash consideration for the acquisition is £132.0m, of whichapproximately £114m will be used to pay off an intercompany balance. £94.9m ofthe consideration relates to the acquisition of the Onetel companies. Of theremaining £37.1m, £10.1m is a fixed sum that relates to the agreement underwhich Centrica will recruit customers for Carphone Warehouse through its BritishGas operations for the next three years, and £27.0m is a variable sum dependenton the number of customers recruited through this channel. In addition, The Carphone Warehouse has agreed to pay Centrica up to a further£22.2m over the next three years if higher British Gas customer recruitmenttargets are met. The transaction is due to complete on 31 December 2005 and is not subject to anyother conditions. At this stage we anticipate that the acquisition willincrease current year pre-tax profits by approximately £4m, and next year'spre-tax profits by approximately £20m. For Further Information For analyst and institutional enquiries Roger Taylor 07715 170 090 Peregrine Riviere 07909 907193 For media enquiries Vanessa Tipple 07947 000 021 Anthony Carlisle 07973 611 888 Citigate Dewe Rogerson 020 7638 9571 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Centrica