KCOM phones pension fund for £500m takeover deal

25 April 2019 | Alan Burkitt-Gray

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A pension fund is set to take over KCOM, the UK city of Hull’s independent telecoms company.

The board of KCOM has accepted a £504 million bid from the Universities Superannuation Scheme, a UK pension fund with over £50 billion under management.

If the deal goes through it will sever the last connection between the east Yorkshire city of Hull and what used to be the city council’s telephone department.

KCOM’s shares shot up on the news of the deal to £0.97 each – valuing the company at £503 million market capitalisation. But that is still a fraction of the £14.17 they hit in February 2000, when the city council sold its shares at the height of the dotcom boom.

The company is the incumbent operator in the city of Hull and surrounding towns and villages, playing the same part there that BT plays in the rest of the UK. BT and its last-mile subsidiary Openreach do not compete in the area and Hull has tended to be a no-go area for other operators.

To visitors the main distinguishing factor was that its phone boxes were creamy white rather than BT’s bright red.

Interim CFO Anna Bielby reported last November that the company had half-year revenues of £142 million with profit before tax of £12.8 million. It has 140,000 business and consumer customers.

In the 1990s KCOM tried to expand into other cities in the UK via a regional operator called Torch Telecom. If finally withdrew by selling its national fibre network to CityFibre in 2015, only for CityFibre to announce the following year that it would start to compete in Hull.

Last October Capacity reported Graham Sutherland, a former BT business group executive, would take over as CEO and work on a new strategy for the company.