Macquarie Infrastructure and Real Assets (MIRA) has won the race to acquire Hull-based telco KCOM.
MIRA’s £627 million final offer dwarfed that of pension fund Universities Superannuation Scheme Ltd (USSL) to the tune of £38 million and concluded a week-long auction process.
USSL first had an offer accepted back in April, with KCOM’s board recommended shareholders accept the £504 million proposal. But in June, MIRA swooped in with a larger offer of 109p – valuing KCOM at £563 million.
The UK takeover panel then ruled an auction should take place to see who would gain control of KCOM. USSL struck first with a £566 million offer but it has ultimately missed out on what is viewed by many as an attractive asset given the growing importance of fibre connectivity.
MIRA commands tens of billions worth of assets and is a major investor in telco infrastructure. It has invested in Arqiva in the UK and owns TDC – the largest telco in Demark.
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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