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KCOM shareholders set to approve £627m takeover by Macquarie

KCOM phone boxes.jpg

Shareholders in KCOM, the UK city of Hull’s independent telecoms company, meet this Friday to approve a £627 million takeover bid from Australian investor Macquarie.

That is 11% more than the £563 million that the KCOM board accepted in early June from Macquarie, and 24% more than the board accepted in April from a UK pension fund.

Macquarie won the battle this month in a week-long auction, when it and the Universities Superannuation Scheme (USS) challenged each other to take KCOM over.

Now the shareholders will meet, appropriately enough, at the KCOM stadium in Hull, home of the rugby league team that the telco sponsors. The board meets first to formally approve the £627 million offer from an infrastructure subsidiary of Macquarie, and then the shareholders get to vote.

KCOM’s market cap today is almost £620 million, with shares at £1.20, but in the company’s post-privatisation days in March 2000 they traded at £15.28 each. They fell quickly with the dotcom crash and have rarely been above £1 ever since – until USS showed an interest in April 2019.

The company started life when Hull’s city council bought the local operation from the then National Telephone Company (NTC) in 1902 for £192,423. The UK Post Office bought out the rest of NTC’s phone networks, becoming BT in the 1980s.

The Hull city telephone department remained unique as the incumbent operator for the east Yorkshire city and its surrounding area, a status it retains to this day under a different name. The major difference was that its phone boxes are still green and cream, rather than BT’s red.

In 1987 the telephone department became a company, Kingston Communications, so that it could raise finance for modernisation. The city council sold its last stake in what was then KCOM in 2012.

But the status of KCOM as an isolated incumbent meant that few other companies came into Hull to compete, and KCOM never offered a mobile service.