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Sparkling revenues prompt acquisition hunt

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Pure Telecom is on the acquisition trail after announcing a healthy revenue forecast on Monday.

The Irish firm, which specialises in providing broadband and voice services to small business customers, announced it expects to record revenues of €8m for 2006. Pure recorded revenues of €6.4m last year; the 2006 forecast is an ambitious 25 per cent increase on that.

Sources close to Pure said the company is operating on a run rate of €800,000 per month and the revenue forecast could actually be conservative.

Pure's profits before taxes and other charges in 2005 stood at €411,000, and the company forecasts a 34 per cent increase year-on-year to bring 2006 earnings to €550,000.

Pure Telecom's current financial strength has prompted director Paul Connell to consider expanding the business. "Yes, we're looking to make acquisitions in Ireland and outside of Ireland," he told ENN.

Connell set up Pure Telecom Austria last year to gain a foothold in Central Europe. "It's a template for rolling out services to the new accession states of the EU," he said, describing the enterprise as at a "seedling" stage, with one full-time employee.

Pure Telecom is also looking at possible acquisitions in Britain, where the company already has around 100 small business customers, according to Connell.

Recent media reports had linked Pure Telecom with Smart Telecom, and Connell confirmed that Pure had a tender document "on the desk" to acquire Smart's residential voice customers but when Eircom disconnected Smart's 39,000 customers, the deal fell through.

"Residential broadband is not really our thing anyway but we would be interested in Smart's business customers, although I've no information on that at the moment," he said.

Connell, who founded the business in 2001 with business partner Alan McGonnell, said the Smart-Eircom dispute was a "Black Monday" for the Irish telecommunications sector, and prompted the company to release its financial figures to demonstrate to consumers that not all telcos were "trading recklessly".

"We don't believe in sacrificing profit margins just to acquire customers and so have never sold our services below cost price. I believe it's this kind of strategy that damages the reputation of the industry because eventually something has to give - whether that's customer service levels or the whole company. We may not be the cheapest but we are still cost-effective and can guarantee that we are committed to the business telecoms market and are here to stay," said Connell.

Copyright © 2006, ENN

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