Outsourcing Agreement with Phoenix IT

KCOM Group (KCOM.L) announces outsourcing and transfer of its

support and field maintenance operations

KCOM Group ("the Group") announces that it has signed a multi-year agreement with Phoenix IT Group (PNX) for the outsourcing and transfer of part of its support and field maintenance business.

The selection of Phoenix was the result of a rigorous process to identify a partner capable of delivering the existing high levels of service provided by KCOM Group to its customers requiring maintenance services. The agreement will result in 142 employees being transferred under TUPE arrangements from KCOM Group to Phoenix IT Services. 

Today's announcement is a further step in the Group's strategy to focus its managed communications service business, Kcom, on its core competencies and on delivering value added services to its customers. Under the agreement, Kcom will continue to provide maintenance services to its customers, as part of its overall managed service offering. Certain other customer contracts will transfer directly to the Phoenix IT Group, allowing Kcom to move away from the provision of stand-alone field maintenance and support, where it has neither the scope nor scale to compete effectively.

Subject to adjustment to reflect the level of working capital at completion, Aghoro 1000 Ltd is being acquired by Phoenix IT Group on a cash and debt free basis for a consideration of £1.8 million 

 Commenting on the announcement, Bill Halbert, Executive Chairman of KCOM Group said, "This agreement is another important step in the transformation of KCOM Group and is consistent with the strategy to focus Kcom, our managed communications services business, on its competitive core strengths.

Following the strategic review, we committed to strengthening the business and focusing on those areas where we could deliver value. By selecting partners focused on delivering the same high levels of customer service, we are able to provide the same range of services, in a more competitive and cost effective way. Our selection process identified that Phoenix had both the required scope and skills to deliver the high quality of service we need.

"Today's agreement allows us to operate more effectively and enables us to continue to provide maintenance services to existing and potential managed services customers, as required."

ENDS

For further information please contact:

KCOM Group PLC:

Bill Halbert, Executive Chairman

Paul Simpson, CFO Tel: 01924 882952 (PA: Annette Watling)

Maitland:

Brian Hudspith/ Amanda Martyr Tel: 0207 379 5151

About KCOM Group PLC

The KCOM Group delivers communications services to a range of businesses and consumers, with an emphasis on exceptional service delivery.

Its Kcom business provides communications services for national multi-site enterprise and public sector organisations across the UK. As an independent provider of these services, supported by its BT Wholesale partnership, Kcom is able to offer advanced network capability and related added value services, coupled with a flexible approach to delivering its customers' requirements.

Its Kingston Communications business provides a range of communications services to businesses and consumers in Hull and East Yorkshire. Eclipse Internet delivers a portfolio of internet based communications services. These are designed to help small businesses and home based workers to exploit the power of the internet to achieve business success.

For more information on the KCOM Group, please go to www.kcomplc.com.