Easynet buys Dutch broadband outfit

Share issue

UK broadband outfit Easynet is to gobble up Novaxess Beheer BV, a Dutch outfit that, like Easynet, is big into providing high-speed Internet services over unbundled local loops.

The deal is worth £26.2m (€38.4m) in cash and assumed debt, and Easynet is part-funding payment through a new share issue, which will raise £8.25m before expenses.

Novaxess will bolster Easynet's existing business in the Netherlands and help it on the path to profitability. Easynet expects to save £1m (€1.5m) a year on consolidating infrastructure and estimates one-off integration costs at €1m.

Novaxess has some 4,500 business customers and employs around 125 staff. It has unbundled 84 exchanges in the Netherlands, covering most of the country's key business districts. In 2003, it generated revenues of £15.1m (€22.1m), and made a pre-tax profit of £100,000 (€200,000).

Easynet chief exec David Rowe said the acquisition has "four key benefits for the company: it significantly enhances our Dutch business, moving it to cash flow positive; it extends our business class pan-European product set through the use of the local loop; it improves Group EBITDA and it accelerates our progress towards cash flow positive. In addition, Novaxess has developed a Voice over IP solution for businesses, which advances our plans in that area."

Last month Easynet reported that it was EBITDA positive in December 2003 and confident of turning cash-flow positive during 2005.

Easynet installed its kit in 68 BT local exchanges during 2003, bringing its total of unbundled exchanges to 149. At the end of 2003 Easynet had connected a shade under 4000 business customers through its local loops and plans to invest in a further 80 exchanges during 2004.

By late morning shares in Easynet were down 3.5p (2.53 per cent) at 135p. ®

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