AT Communications Group Plc has made their second acquisition in almost as many months with the purchase of LCR company T-Liaison. This follows the company’s purchase of Sterry at the end of 2005 and rounds off a twelve month period that saw ATC listed on AIM.
T-Liaison is the Leeds based company resurrected from the ‘remains’ of Telia following the latter’s pull out of the UK a couple of years ago and run by Telia’s former MD Mark Sensier.
In the official announcement ATC say they have entered into an agreement to acquire T-Liaison Limited and its wholly owned subsidiary, T-Liaison Communications Limited, a virtual network operator (VNO), for a total consideration of £1.1 million. The consideration is to be satisfied by payment of £0.55 million in cash and by way of the issue of £0.55 million in new ordinary shares of ATC, being 1,046,511 shares.
T-Liaison is a supplier to ATC and buys wholesale landline minutes for resale mainly to the UK reseller market. T-Liaison has its own switching platform based in TeleCity.
The Acquisition provides ATC with its own hosting environment and the capability to offer managed service solutions without any incremental hosting fees. This will allow ATC to accelerate the time to market of its IP managed service offering and has led to the purchase of Mitel’s 3600 Hosted IP Voice Application by ATC. The Acquisition will also provide an established reseller base on which to leverage ATC’s existing products and services, in addition to the proposed IP managed service offering.
ATC say the integration of T-Liaison provides potential for margin improvements and additional network services resources plus enhanced cross selling opportunities, particularly in the recently acquired Sterry customer base. As a supplier to ATC, there is good strategic fit with ATC’s Network Services division.
There are also opportunities to sell on hardware systems and maintenance services within T-Liaison’s reseller customer base although many resellers looking to develop a channel of their own often find prospective partners suspicious of their motivation.
The Managing Director of T-Liaison, Mark Sensier, will join ATC’s management team and head up ATC’s Network Services division, taking responsibility for selling services into the combined customer base. It is believed Sensier will remain for an ‘earn out’ period though this is still to be confirmed.
The announcement also says ATC will also assume £1.6 million debt following completion of the Acquisition. In the year to 31 March 2005 T-Liaison made a loss before tax of £343,000. In prior years T-Liaison had been profitable and the loss resulted from downward price pressure within the industry as well as the loss of a number of unprofitable dealer customer accounts, as the business refocused on the reseller market. These trends have been reversed in the current financial year.
Alex Tupman, ATC Group Chief Executive commented: “This strategic Acquisition will help us further develop leading edge IP technology solutions and accelerate the delivery of our IP managed service proposition to the market. What makes the Acquisition particularly exciting is that it will give us immediate access to a hosting environment for the Mitel 3600 Hosted IP Voice Application. A further benefit for ATC is that the Acquisition will provide additional scale, resources, cost savings and immediate access to a reseller customer base.”