Dublin accountant Bernard Somers and entrepreneur Seán Melly have realised their second telecoms fortune in nine years with the sale of the central and eastern European phone group eTel to Telekom Austria for significantly more than €90 million. Arthur Beesley, Senior Business Correspondent, reports.
Mr Somers, the eTel executive chairman, will realise up to €10 million in respect of his 10 per cent shareholding and group vice-chairman Mr Melly will realise a similar amount from shares held by his vehicle Powerscourt Investments. Other eTel managers, including financial controller Richard Duggan, will realise smaller amounts. Prague-based entrepreneur Enda O'Coineen is also a minor beneficiary.
Austria Telekom will acquire the entire share capital of eTel, which is vested in a British Virgin Islands entity, in a deal that is subject to regulatory approval. Some 70 per cent of eTel's shares are held by investment funds Intel Capital, Greenhill & Co, Dresdner Kleinwort Wasserstein and Argus.
With annual sales of some €100 million in 2005, eTel has voice, internet and electronic data operations in Austria, Hungary, the Czech Republic, Slovakia and Poland. The business posted its first pretax profit last year.
As many as nine companies are believed to have expressed an interest in buying eTel, which suggested earlier this year that it was preparing for an initial public offering on the Alternative Investment Market (Aim) in London.
Telekom Austria said eTel had accumulated tax losses carried forward of some €170 million, a reference to the accumulated deficits in some of the 11 groups acquired by eTel in recent years. Such losses are likely to be very beneficial on the bottom line to Austria Telekom.
Mr Melly is known to have made some £6.5 million (€8.25 million) in 1997 when telecoms giant WorldCom paid £17 million for 70 per cent of his first venture, TCL Telecom. Mr Somers received some £3.5 million at that time from his stake in TCL, in which WorldCom took a minority position in 1996.
The latest deal flows directly from eTel's strong position in the Austrian market, where it spent €30 million last March on the acquisition of internet service provider EUNet. eTel had already won significant market share in Austria, a market overlooked by some of the bigger telecoms groups, even though the group was established to exploit opportunities in the emerging economies of the former Soviet bloc.
eTel indicated at the time of the EUNet transaction that the deal would bring in additional annual revenue of some €27 million. The group projected at the time that it would generate a profit of €10 million on revenue of €135 million in the 12 months after the EUNet deal.
The deal is expected to close in the first three months of 2007.
When contacted yesterday, eTel declined to comment on the sale.
