Vodafone has agreed to acquire Dublin-based fixed-line telecoms provider Perlico for up to €80 million in a move aimed at giving it a full offering of mobile, broadband and fixed-line telephone services.
It is understood that Vodafone will pay an initial €32 million in cash to Perlico's shareholders. Perlico's backers can earn up to another €48 million as part of an earn-out over more than three years. The targets for the earn-out period were not disclosed.
Perlico was set up in 2002 and has 62,500 customers, of which 25,000 are broadband subscribers. The company, which employs 67 staff, has yet to turn a profit. It said revenues for 2007 would be €40 million and it will record a net loss of €7 million.
Vodafone is Ireland's biggest mobile operator, with a market share of 45 per cent. The company had 2.217 million customers in Ireland at the end of September, according to results published yesterday.
This was a net increase of 30,000 on the figure at the end of June. It has 45,000 3G broadband customers here.
Perlico's founder Iain MacDonald, who owns 20 per cent of the business, will earn about €6.4 million initially from the deal. Mr MacDonald also stands to earn an additional €9.6 million from the sale if the company meets its performance targets.
His father Malcolm, the company's chairman, owns 8 per cent of the telecoms group and will earn about €2.6 million from the sale.
Dr Michael Smurfit and his family own about 13 per cent of Perlico and will get about €4.2 million from the deal initially and an extra €6.2 million if the agreed subscriber targets are met.
Other shareholders in Perlico include Kingspan founder Eugene Murtagh, former IAWS executive David Martin and technology entrepreneur Jim Mountjoy. In all, about 45 individual shareholders will benefit from the sale.
Mr MacDonald said Perlico had raised €23 million to date from investors. At the time of the Smurfits' investment at the end of 2006, Perlico was valued at €55 million.
A number of industry players were surprised at the price that Vodafone has agreed for Perlico. But Vodafone Ireland chief executive Charles Butterworth said the deal represented good value. "We are extremely happy with the deal and with the price," he said. "This is a very strategic deal for Vodafone . . . we want to be more than just a pure mobile offering."
He described Perlico as the most "credible challenger" to Eircom in the fixed-line market.
Perlico will operate as a subsidiary of Vodafone and retain its brand. Mr MacDonald and other key senior management are remaining with the company.
Vodafone said the deal would enable it to sell a bundled package of telecoms services to customers, comprising mobile, fixed-line and broadband.
It will offer fixed-line and broadband services through its retail stores network while Perlico will sell Vodafone's mobile and 3G broadband through its existing sales channel.
In its results announcement yesterday, Vodafone said average revenue per user in the three months to the end of September fell by 3.8 per cent to €45.10 per month. This indicates that its monthly revenues are just shy of €100 million.
Vodafone's Irish customers consumed on average 235 voice minutes and sent 122 text messages a month in the quarter, well ahead of the group's European average. It said 72.6 per cent of its customers here are pre-paid.
At a group level, Vodafone's revenues rose by 4.4 per cent to £17 billion, while its operating profit increased to £5.2 billion.
