Hull telecoms float imminent

The proposed #500m partial flotation of Kingston Communications, the UK’s only municipally owned telephone company, is expected to be sanctioned later today.

The decision on the flotation is due to go before an emergency meeting of Hull City Council, Kingston’s owner.

The outcome is thought to be a formality.

Hull’s ruling Labour group put forward the flotation plans in an effort to meet Kingston’s ‘aggressive business plan’ which is intended to take coverage outside Hull and into other parts of the UK. It is also expanding the local telephone network into the villages surrounding the city and is developing satellite, video and multimedia services.

If the plan is to succeed, Kingston must have sufficient financial resources available to keep pace with the proposed investment levels.

The council believes these resources can only be drawn from borrowing on the money markets, generating profits internally and direct investment.

But these sources are thought to be insufficient, individually or in combination, to meet the investment needs of the company.

The Labour group is convinced that the best way to expand is by a partial flotation of the company.

The council is likely to retain a majority stake, raising up to #200m in the process. Kingston has been valued at #500m by Hull’s adviser, Deutsche Morgan Grenfell.

The decision has been taken with a government threat in mind. The Department of the Environment, Transport and the Regions has said it would refuse to extend Hull’s exemption from legislation which makes it hard for councils to control trading organisations.

Once Kingston is floated, the company headquarters will remain in Hull.

Local people will also be offered the opportunity to invest in the company at a small discount.