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NetServices Exits Wholesale Consumer Broadband

Posted: 08th May, 2007 By: MarkJ
Back in March we revealed (news) that NetServices (NS) had begun to drop some of its smaller domestic wholesale broadband (ADSL) vISP clients. Today the group has announced completing the sale of its volume consumer broadband wholesale business to 186k Ltd (“186”) for a total cash consideration of approx £1M:

Under the agreement NetServices will transfer approximately 174 of its consumer focused wholesale broadband reseller contracts (including approximately 23,000 end user lines) to 186k which will also assume the liability for the required BT central pipes and 5 NetServices employees will transfer with the business. NetServices will retain ownership of 23 business to business reseller contracts which will be managed by 186k in return for a monthly revenue share arrangement.

The contracts being transferred represented approximately £4.5m of NetServices’ consolidated audited revenues for the year ended 31 August 2006. The transaction will permit NetServices to focus on the core strategic objectives of lower volume, higher margin converged B2B voice and data opportunities. The net proceeds will be used to support the marketing of the converged product portfolio, to develop further distribution channels.

Mark Vickers, Chief Executive of NetServices commented:
“I am delighted that we have been able to reach agreement with 186k for the transfer of these contracts so that our resellers can continue to have their specific needs met by a business specialising in the broadband arena. For NetServices to execute our strategy in converged business solutions, we require the focus of single business direction we achieve through this divestment. This deal ensures our legacy resellers are serviced as well in the future as they have been in the past whilst enabling us to move NetServices forward to it’s next chapter.”

NetServices had previously given its smaller consumer wholesale broadband clients until the end of April last month to find an alternative supplier.

The group claimed that such clients simply weren't profitable enough to supply, although the negative PR they suffered as a result of enforced customer migration between vISP's can't have helped. Not to mention the whole Biscit debacle.
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