Ernst & Young acted as the lead adviser on this month’s sale of One.Tel, the troubled telecoms company, to gas utility company Centrica for #58m.
The deal is set to make Centrica the largest provider of indirect telecom services in the UK with around one million active customers.
Doubts surrounded the future of the telecoms company after its Australian parent company collapsed at the end of May with debts of A$180m (#65m).
Administrators at Ferrier Hodgson were called into the Australian company after it was revealed a planned rights issue of A$132m would not keep it afloat.
The company, which in the UK specialises in selling cheap-rate long-distance phone calls, was the brainchild of media tycoons’ sons Lachlan Murdoch and James Packer, who were both directors and, according to Ferrier Hodgson, could now face claims of trading while insolvent.
Their fathers, Rupert Murdoch and Kerry Packer, were major shareholders in One.Tel.
E&Y partner Richard Coates led the deal, which was pulled together less than a month after the administrators were called in. The UK operation was the largest asset of the Australian parent, employing 600 staff in west London.
Coates said: ‘Although the insolvency of the Australian parent and other parts of the One.Tel group made this a particularly challenging transaction, One.Tel in the UK is a strong and profitable business and this has enabled it to weather the storm’.
The deal involved constant communication with the administrators in Sydney, which was not made easy by the nine hour time difference between Australia and the UK.
A spokesperson for the telecom company said: ‘It has always been a battle talking with Australia, so we were used to the 3am conference call.’
One.Tel’s typical customer is described by the company as a ‘savvy user’, a young professional, mostly based in and around London.
It started operations in the UK in August 1998, since when it has built a customer base of some 750,000 users.
The deal will give Centrica control of the One.Tel brand in Europe and North America.
The company has predicted sales of around #100m in the UK for the year ending 30 June 2001.
E&Y’s Coates said: ‘The sale price … shows that the telecoms market is still firm where fundamentally sound businesses are concerned.’
This was put more simply by the company itself. ‘One.Tel is here to stay,’ said Chris Weston, managing director of the UK company.
Another corporate finance story can be found at www.accountancyage.com/Business/1123269.
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