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Business telecoms provider SpiriTel's market value has struggled to keep pace with the startling transformation of the company, which has just completed its sixth acquisition in two years.

This is the handiwork of chief executive Alistair Mills, who was promoted to the post after previous management had dragged the company into insolvency. With two failing businesses now closed and most of the board replaced, the company has begun to focus on providing ‘integrated business communications’.

SpiriTel offers a combination of phone calls, phone lines, broadband, VoIP, WiFi, PBXs, cabling, mobile calls, mobile data and mobile internet. Its technology division supports this with its own IP network, as well as providing managed services and selling 'wholesale voice' to most of the UK’s top ten telephone companies.

In this highly fragmented sector there are many providers that sell a few of these products and services but much fewer that do them all, providing both competitive and acquisition opportunities aplenty for SpiriTel. Its recent £1.5m deal with Regent Inns was the largest hosted VoIP and WiFi contract ever in the UK and proves the attractions of SpiriTel’s offering.

Mills stresses that the chief purpose of any acquisitions is to provide substantial cross-selling opportunities, with the aim now to add other market verticals to existing strength in such as hospitality and legal. ‘Acquisitions are profitable for us very quickly. We never keep the vendor and rarely keep any staff. We just bolt them on. ’

SpriTel's results for the year to April, in which two acquisitions were made, showed revenues up 20% to £16.7m, gross profits tripling to £6.4m and £11m of debt to private equity backer Penta Capital restructured much more favourably for the company. However, the company's rating has lagged the group's swift transformation and with more growth to come, the shares are a buy.

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Spiritel	AIM	£5.43m	0.92p	-0.08p
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SpiriTel			05/08/2008