DFJ Esprit backs €184m telecoms merger

The merger of DFJ-backed Imagine with Irish Broadband has taken the revenues of the combined group to more than €100 million, a more than tenfold increase since the venture firm invested two years ago.

Imagine Communications Group, an Irish telecoms company backed by DFJ Esprit, a UK venture capital firm, has merged with Irish Broadband, owned by NTR, an infrastructure investor, and Kilsaran Concrete, an Irish construction company.

Irish Broadband’s owners will invest €7 million ($10.9 million) and take a 25 percent stake in the combined group which will have yearly revenues of more than €100 million. The deal values the combined group at €184 million, and the acquisition was on a debt-free basis.

DFJ Esprit invested €12.5 million in Imagine in 2006 for an undisclosed stake when the company had revenues of €11 million. 

The combined group will have a 12 percent share of the small and medium enterprise market with 15,000 business customers, as well as a 10 percent share of the broadband market with more than 80,000 customers and a 5 percent share of the total residential market with more than 115,000 customers.

Paul Murray, a partner at DFJ Esprit, said the company may look to an IPO this year or an eventual exit to a trade buyer.

Murray said: “Our belief is the telecoms market is heading for a cycle of consolidation and national operators are looking to expand across geographies.” The €1.63 billion agreed merger of Permira-backed Debitel with Freenet, its listed German rival, is one of a number of recent examples of mergers in the sector.

Imagine will look to capitalise on Wimax technology, a next generation alternative to wi-fi, which provides longer range and faster internet connections, Murray said.

Murray said the rapid growth in revenues at Imagine has been in part due to the persistence and energy of its founder, serial entrepreneur Sean Bolger. He founded the telecoms company ITL in 1993, which he merged with Netsource selling it for around $300 million (€192.7 million).