US telco Atlantic Tele-Network (NASDAQ:ATNI) has agreed to acquire a controlling stake in Bermudan fixed-line operator KeyTech (BSX:KEY.BH), in a deal that would enable it to provide local quad-play services.
US telco Atlantic Tele-Network (NASDAQ:ATNI) has agreed to acquire a controlling stake in Bermudan fixed-line operator KeyTech (BSX:KEY.BH), in a deal that would enable it to provide local quad-play services.
If approved, the transaction would combine mobile operator Bermuda Digital Communications (CellOne), jointly 85% owned by ATN and KeyTech, combined with KeyTech, which – trading as Logic – provides voice, broadband and cable TV services in Bermuda and the Cayman Islands.
Massachusetts-based ATN will exchange its 43% stake in CellOne and US$52m in cash for a 51% stake in KeyTech.
CellOne will be merged into a company within the KeyTech group. CellOne’s minority investors, which together hold a 15% stake, will have the right to convert their shares into common shares in KeyTech, equal to a combined 8.9% interest.
KeyTech will use some of the cash proceeds to fund a one-time dividend payment to its existing shareholders and retire its subordinated debt. Following the deal, KeyTech expects to have US$37m in debt, which will be consolidated onto ATN’s balance sheet.
ATN expects the deal to be accretive to its net income from the first full quarter after closing, expected during Q1 2016, subject to approvals from KeyTech shareholders, the Bermuda Regulatory Authority, the Federal Communications Commission, the Information and Communications Technology Authority of the Cayman Islands and the Bermuda Stock Exchange.
The US telco – which services rural, niche and other underserved markets in the US, Bermuda and the Caribbean, expects KeyTech to contribute incremental additional revenues of US$80m-US$90m.
BofA Merrill Lynch and Wakefield Quin and Cleary Gottlieb Steen & Hamilton advised ATN.
This is ATN’s second announced acquisition this month. On 1 October, it agreed to buy Innovative, which provides cable TV, internet and fixed-line services in the Virgin Islands, for some US$145m.
ATN CEO Michael Prior said the two deals illustrated “the potential to consolidate and strengthen our position in existing markets and to provide customers with a single connectivity solution for mobile and fixed telecom and media services”.
CellOne competes with Digicel in Bermuda.