KCOM receives bigger takeover offer

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(Image credit: KCOM)

KCOM has recommended shareholders accept a new takeover from an Australian infrastructure group, having previously accepted a lower offer from a UK pension fund in April.

The £563 million offer from Macquarie Infrastructure and Real Assets (MIRA) values shares at 109p and is £60 million than the amount that the Universities Superannuation Scheme (USS) was prepared to pay.

The Hull-based telco says the deal is a good one for shareholders and if accepted, would end 20 years as a publicly traded company.

"This offer provides our shareholders with even greater value in cash for their shares, as well as providing KCOM with a strong partner as we work to maintain, build and enhance our offering and position,” said Patrick De Smedt, interim non-executive chairman of KCOM.

KCOM takeover

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.