Acq 16 - Telecom Direct

AdEPT Telecom plc announces a 3 year agreement with The CarphoneWarehouse Group ("CPW") and the £6.4 million acquisition of Telecom Direct Limited

AdEPT Telecom plc ( "AdEPT" or "the Company"), a leading independent provider of award-winning telecommunications services and landline calls, line rental and broadband is pleased to announce

A new 3 year agreement with Opal Telecom ("Opal", the B2B division of "CPW") to migrate AdEPT customers onto their 21st Century Network generating the associated cost and technological benefits; and
A substantial acquisition of fixed line reseller Telecom Direct Limited ("Telecom Direct") which for the 12 months to March 2007 generated revenues of £13 million. As a result, AdEPT has become one of the UK's largest fixed line resellers.

AdEPT separately announces its interim results today for the six months ended 30 September 2007.

Roger Wilson, Chairman of AdEPT said: "Today's announcement marks a step change in the size and future potential of our business. The acquisition of Telecom Direct will increase turnover by 60% and we expect the deal to be significantly earnings enhancing over the medium term. We are also delighted that the founder of Telecom Direct, Dave Stretch, is remaining with AdEPT to run the Telecom Direct division."

Dave Stretch, Director of Telecom Direct said, "I believe that the strength and experience of AdEPT will bring significant benefits to our customers and channel partners. I am looking forward to working with the AdEPT team and continuing to expand the enlarged business."

Opal Telecom Agreement

AdEPT and Opal have entered into a 3 year deal which will provide AdEPT's customers with calls, line rental and broadband services and facilitate the introduction of a range of new converged products. During the next 12 months, AdEPT intends to migrate a substantial proportion of its customers to the 21st Century Network which is based on Local Loop Unbundling technology that has been adopted by Opal and CPW.

AdEPT will become one of the first major telecom reseller's to move to the 21st Century Network. The agreement will generate immediate savings, including the "bundling" of fixed line and broadband services together, in a way that was not possible using conventional technology. The ability to provide bundled packages has been shown to have multiple benefits in increasing customer satisfaction, increasing revenue per customer and reducing churn.

The telecoms industry is united in its belief that the convergence of voice and data traffic over IP-based Next Generation Networks represents the future. This agreement ensures AdEPT is positioned to provide it's rapidly expanding customer base with new technologies as they develop, such as SIP, video conferencing, IPTV and virtual office technology.

David Goldie, COO of CPW's Telecoms Division said, "We are delighted to have entered into an agreement with AdEPT, one of the largest and most progressive UK reseller's. CPW has invested £200m in building its new network based on Local Loop Unbundling in over 1,400 exchanges to date, which covers more than 70% of the UK business population. We believe this investment positions us, and AdEPT Telecom, to take advantage of the available commercial and technological opportunities."

Acquisition of Telecom Direct Limited

AdEPT is acquiring Telecom Direct, one of the oldest independent fixed line telecom resellers in the UK, established in 1997. The acquisition follows the Company's core strategy of acting as a consolidator of the highly fragmented fixed line business market. Telecom Direct represents a natural fit with AdEPT as it operates o ery similar model and customer base and should immediately benefit from the introduction of AdEPT's automated back-office systems.

Telecom Direct currently provides voice telephone services to 5,500 business customers. In the year to 31 March 2007, Telecom Direct generated revenues of £13 million and profits before tax of £0.2 million. The acquisition will therefore increase AdEPT's turnover by over 60% per annum, making the Company one of the largest fixed-line reseller's in the UK.

The consideration payable by AdEPT is subject to performance criteria. We are currently estimating a total payment of £6.4 million, to be satisfied by a cash payment of £5 million on completion, £0.4 million payable six months following completion, and the balance of £1 million payable after 12 months. As the final amount paid is subject to future operational and financial criteria the actual amount may be more or less than this. The total consideration will be funded by a mixture of cash and bank debt.

Commenting on the acquisition, Roger Wilson, Chairman of AdEPT said, "This is a very significant transaction as it has immediately changed the scale of the business and led to our ability to reach an agreement with CPW. We expect the deal to be significantly earnings enhancing in the medium term."