The takeover battle for KCOM has taken a new twist after pension fund Universities Superannuation Scheme Ltd (USSL) increased its offer for the Hull-based telco.
USSL’s original offer of £504 million, or 97p a share, was recommended to shareholders in April with KCOM’s board believing it to be a “compelling opportunity”.
But in June, Australian-based Macquarie Infrastructure and Real Assets (MIRA) swooped in with a larger offer of 109p – valuing KCOM at £563 million.
A week-long auction is now underway between the two entities and USSL has landed the first blow, offering £566 million. It remains to be seen whether MIRA will attempt to beat the new offer.
Speculation regarding a takeover had intensified in recent months following a major profit warning issued last year, followed by a series of management changes. Virgin Media was one of the reported suitors, as the acquisition would allow it to enter an entirely new market.
BT and Virgin Media do not operate telephone or broadband services in Hull due to KCOMs historic advantage in the city. As a condition of its licence renewal in 1914, KCOM was required to purchase the local telephone infrastructure, whereas other regional telecom groups were absorbed into the General Post Office (GPO), which became BT.
A key difference, aside from white phone boxes, is that KCOM has used Fibre to the Premise (FTTP) for its superfast broadband rollout, rather than the Fibre to the Cabinet (FTTC) deployed by Openreach.
This means large parts of the region has access to some of the fastest speeds in the UK, but critics argue the company enjoys a monopoly – even though it is required to provide wholesale access to its infrastructure.
KCOM is expected to deliver the proposed universal service obligation (USO) to Hull and East Yorkshire, with Openreach covering the rest of the country.
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