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Thursday, August 10, 2006

UK Altnet Consolidation Continues

Another UK fibre network looks as if it is about to be consolidated.

Fibernet is a small company with a market cap of around £35m (with net cash balance of £10.4m) – it has a UK fibre network and a couple of MANs in London and Frankfurt. It has UK turnover for the most recent six months of £23.7m and is slightly loss-making at £1m. The losses will be easily sorted out by a few executive redundancies and a big write-down of the network (thereby reducing depreciation and amortization charges)

The appeal to a potential purchaser if an altnet is reducing the number of bidders on contracts or perhaps a cheaper way of adding expansion to their network rather than building themselves.

Sometimes I wonder whether these mysterious bid approaches actually happen or it is an easy way to put the company up for sale without losing too much face. I also wonder how many other small independent UK networks are hoping for a similar fate?