AdEPT Telecom

AdEPT Telecom made its debut on AIM following a £7.4m placing at 140p, with the shares dialling higher in early dealings. Chaired by founder and former Telewest managing director Roger Wilson, the Tunbridge-Wells-based company is a ‘non-network’ provider of fixed line calls, line rental and broadband services under the AdEPT Telecom brand to business and residential customers.

The float proceeds financed the acquisition of rival reseller Transglobal – whose £5m of annual sales means total group sales are now over £17m – and will also be used to repay bank debt and fuel further acquisitive moves.

Wilson says AdEPT, which has now completed 11 acquisitions over the past three years, plans to consolidate the market further. ‘Consolidation has happened at the macro-level, but at the bottom end there are hundreds of resellers out there,’ he explains. AdEPT mainly operates in the business services provider sector, where the market for supplying fixed-line calls and line rental is very fragmented. Ofcom statistics suggest there are some 600 small-to-medium fixed-line resellers, many of them with annual sales of sub-£2m, that could look to AdEPT for an exit.

Wilson wants to acquire assets rather than entire businesses, cherry picking business contracts and then swiftly integrating and re-branding them ‘within six weeks of the date of ownership’. He argues the group’s lean cost structure and efficient systems can generate EBITDA margins of around 20% on acquired assets. With a track record of turning break-even assets into profitable ones, AdEPT looks a decent economies of scale story. Watch this space.