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iomart sells Broadband Business to Centrica Telecommunications

9th January 2002 · Press Releases

iomart has sold its broadband internet business to Centrica.

The deal, worth £2 million, will see the the business transferred to the utilities giant.

In the year to the end of December 2001, the broadband division lost £1.9 million.

A spokesman for Centrica stated: "This acquisition gives us a key position in the developing broadband market and offers access to the technological knowledge of Iomart.

"Combined with Centrica’s financial resources and marketing expertise, this will allow us to further develop our telecoms strategy."

The Stornoway centre will probably become part of either British Gas Communications or One.Tel, Centrica’s two telecom brands.

The disposal of the broadband business, which acts as a reseller of BT Wholesale’s ADSL service, will enable the company to focus on its e-mail outsourcing and internet security divisions.

iomart chief executive, Angus MacSween, said the sale would remove "several hundred thousand pounds a month" from the firm’s cost base. In the six months to June 2000 it recorded pre-tax losses of £3.28 million.

MacSween said: "Our problem was that it was impossible to predict when [ADSL] demand would kick off.

"It was relatively successful, but still unprofitable. Centrica has the resources to see it through to profitability. We didn’t.

"We can now focus on the new strategy concentrating on the Netintelligence suite of products."

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