Acquisition of Nessco Limited

19 March 2010

SPIRITEL PLC

("SpiriTel" or "the Group")

Acquisition of Nessco Limited - Five Acquisitions in five months

SpiriTel plc, (AIM: STP), the business communications service provider, is pleased to announce the acquisition of the entire issued share capital of Nessco Limited ("Nessco" or "the Company"), for an initial cash consideration of £1.2 million. The acquisition is SpiriTel's eleventh since 2006. 

Based in Bellshill near Glasgow, Nessco is a provider of IP based telephony solutions and networking services to approximately 800 customers. The company is particularly strong in the healthcare, local government and hospitality sectors and customers include NHS Highland, Aberdeen City Council and Macdonald Hotels. Established over 30 years ago, Nessco is renowned as one of the leading Mitel resellers in the UK and, like SpiriTel, has the highest level of accreditation as a Mitel Premier Partner.

Since 2006, SpiriTel has been an active consolidator within the highly fragmented reseller market and has selectively acquired and rapidly integrated high quality telecoms resellers and service providers that offer potential to cross sell the Group's 'complete business communications' portfolio. The Nessco customer base represents a significant opportunity for cross sales of mobile voice and data solutions, which is a key strategy for SpiriTel in 2010. 

Nessco marks SpiriTel's first acquisition in Scotland and, following the recent purchase of Boucon Network Solutions in Wales, the Group is now one of the few service providers offering genuine nationwide engineering coverage. SpiriTel expects to rapidly integrate Nessco into its Business Division, which now has offices in Bellshill, London, Wigan and Cardiff.

Under the terms of the acquisition, SpiriTel has agreed to pay £1.2 million in cash on completion and deferred consideration of £0.25 million after nine months and £0.25 million after eighteen months. Performance-related earn-out payments of up to £0.3 million may also become payable in cash in November 2011. Prior to completion of the acquisition, some assets and operations of Nessco were transferred to the vendors. The estimated value of the Nessco net assets acquired was approximately £0.1 million as at 31 March 2009. In the year then ended, the acquired operations generated revenues of £3.2 million, EBITDA of £0.2 million and a loss before tax of £0.05 million. During the nine months to 31 December 2009, the acquired operations have generated EBITDA of £0.2 million and a profit before tax of £0.05 million.

The acquisition was funded by an extension to SpiriTel's existing debt facility with Clydesdale Bank. The Group has received strong and consistent support from Clydesdale to help fund an acquisition strategy which has now incorporated eleven acquisitions since 2006 and five in the past five months.

SpiriTel anticipates a straightforward integration process for Nessco that will focus on leveraging the operational gearing of SpiriTel's existing operations to deliver cost synergies. The directors of SpiriTel believe there is a significant opportunity to cross sell the Group's 'complete business communications' service offering into the Nessco customer base. The acquisition is expected to be immediately earnings enhancing.

Commenting on the acquisition, Alastair Mills, Chief Executive of SpiriTel said: "Nessco represents a rare asset, possessing an excellent customer base, a long and successful track record of IP Telephony, specialising in Mitel solutions and supported by a highly skilled engineering team. The Company's operations are particularly complementary to SpiriTel's and we are confident of a swift and effective integration into our Business Division."

He added: "We are delighted to complete our first acquisition in Scotland, a deal of strategic importance to the Group which will enable us to offer genuine nationwide engineering coverage to our growing base of 4,000 business customers."

Austin Davidson, Managing Director of Nessco said: "Nessco has 30 years experience in Scotland and is recognised as a trusted provider of telephony solutions for business customers and a leader in converged communications solutions. We are confident that SpiriTel represents a strong fit for both our staff and customers. "

For further information please visit www.spiritelplc.com or contact:

Notes to Editors

SpiriTel is a business communications group which is taking advantage of the opportunities created by rapidly changing telecoms markets in the UK as the migration to Internet Protocol (IP) based services accelerates. The Group is a consolidator of the highly fragmented UK telecoms reseller market and is building a substantial customer base and scale through selective earnings-enhancing acquisitions. We are organised into two divisions, SpiriTel Technologies - focused on our infrastructure and IP products and services - and SpiriTel Business, which provides our fully integrated range of voice and data services direct to business customers.

Today, the Group offers our 'complete business communications' portfolio to a customer base of small and medium sized enterprises and an increasing number of larger national and international organisations. We are a recognised leader in the provision of new, but proven, Voice over IP (VoIP) solutions that are firmly based on the old-fashioned service values, which run throughout the Group.