Magnet Networks reports €4m loss in ‘tough’ telecoms market

Magnet Networks, the Irish telecoms provider which acquired the retail business of rival Imagine Communications in a €16 million all-cash deal earlier this year, has reported a €4 million loss for 2015.

This compares to a €15.6 million profit a year earlier, newly filed company accounts show.

Magnet, which is owned by the Irish-American entrepreneur Ken Peterson, said despite the loss the company continued to trade on an "ebitda-positive basis" and expected to continue to do so this year.

The group comprises two Irish and one UK divisions: Magnet Business, Magnet Residential and London-based Velocity1 Limited.

The deal to acquire the retail business of Imagine in April made Magnet the third-largest business telecoms provider in the country with 11,000 SME and corporate customers.

“The Irish telecoms market remained a very tough competitive environment in 2015; however, in line with the broader economy being experienced we did see a halt in the decline in market size, the first such positive trend reversal in over five years,” the company said.

Negative impact

Last year, Magnet ceased the provision of internet protocol television (IPTV) services to the residential market in Ireland, which it said had a negative impact on revenues.

Overall, turnover dipped to €12.3 million in 2015, as compared to €12.8 million a year earlier.

The group said at the end of last year its network reach in Ireland comprised of 40 unbundled Eir exchanges, and 32 fibre-to-the-home residential housing developments in Dublin, and counties Laois and Meath.

Magnet, which employs 66 people, said the business-to-business market remains the key growth focus area for the company in Ireland, offering stronger margins and lower churn than the residential market.

Staff costs totalled €4.16 million in 2015 as employee numbers declined from 71 people in 2014. Directors’ remuneration was €284,957.

The accounts show Magnet has a potential deferred tax asset of €11.9 million as a result of trading losses incurred to date. It said this asset “has not been recognised as it is uncertain when the company will generate sufficient trading profits to utilise the losses forward”.

Established in 2004, Magnet, which is owned by Columbia Ventures Corporation, has invested in excess of €120 million in developing its telecoms network.