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Pipex Communications (FFG)

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Friday 13 July, 2007

Pipex Communications

Disposal

Pipex Communications PLC
13 July 2007

13 July 2007


                            PIPEX COMMUNICATONS PLC

                      Sale of Broadband and Voice Division


Pipex Communications plc, a major provider of telecommunications and internet
solutions including broadband, voice, web hosting and network services, today
announces that it has entered into an agreement for the sale of its subsidiaries
owning its consumer Broadband and Voice division to Tiscali S.p.A. (Borsa
Italiana, Milan: TIS) for a total consideration of approximately £210 million,
on a debt-free basis, before adjustments.  The corporate broadband customers
will remain within the Pipex Group.


The subsidiaries being sold to Tiscali are: Switch2 Telecoms Limited, Pipex
Homecall Limited, Toucan Residential Limited, Pipex Internet Limited and Toucan
Residential Ireland Limited.


Pipex's Broadband and Voice division is a leading provider of telecommunications
and Internet services in the UK market, reporting revenues of £231.7 million and
profit before tax of £13.9 million, excluding amortisation of goodwill and
inter-company interest, in the year ended 31 December 2006.  As at 31 December
2006, net tangible assets stood at £13.1 million, excluding goodwill,
investments and inter-company balances.  At that time, the division had
approximately 570,000 Broadband customers and 480,000 Voice customers.



The transaction, which constitutes a fundamental change of business for the
purpose of the AIM rules, is conditional, inter alia, on shareholder approval
and also competition clearance being received.



A circular convening an Extraordinary General Meeting will be posted to
shareholders shortly.



The proceeds of the disposal will be placed on fiduciary deposit pending the
directors' consideration of its further application.



Pipex was advised on the transaction by UBS Limited and Oakley Capital.



The continuing group

Following the disposal of the Broadband and Voice division, the Group will
consist of 3 divisions namely Web Hosting, Business Services and Pipex Wireless
(WiMAX).



Hosting

The growth in Pipex's hosting operations has been impressive, with a year on
year growth in active services exceeding 24%. In the ground breaking area of
virtualised hosting solutions and virtual private servers, Pipex Hosting
achieved in excess of 90% customer growth, and is now one of the two largest
hosting providers by subscriptions in Europe (based upon SW-Soft statistics).
Pipex's domain name market share has also increased by 25% over the last year,
to 2 million domains. More than one in every five domains in the UK is
registered through Pipex hosting.



Pipex's new data centre in Germany which utilises the latest technological
advances to ensure energy efficiency is now fully operational, and was a
contributing factor in Pipex winning the prestigious "Best Enterprise Internet
Hosting Provider in Germany" from the eco Internet Awards 2007.



Business Services

Pipex Business Services, the SME and Corporate unit, has seen good growth in the
high end hosting, leased line and IPVPN sectors.  New contracts have been
secured from large organisations including T-Mobile, Servista, Cost Cutter, Red
Bull Racing, Rosebys, British Museum and British Library. There has also been an
increase in additional services being taken by long standing corporate customers
such as Littlewoods Gaming (Sportech plc) and Alliance & Leicester.



New product launches include Boundary Networks, a secure private network that
enables organisations to extend the security capabilities of their internal
network across the Internet to the remote user CPE device. This enhances
business continuity for retailers with an innovative approach to remote branch/
store and mobile office security.



Pipex Wireless (WiMAX)

Following the successful launch of WiMAX services using licensed spectrum in
trials in Milton Keynes, Warwick and Leamington Spa, Pipex has generated
considerable interest from other councils who are considering offering WiMAX
services.



In addition to partners Intel, National Grid Wireless and Ericsson, the division
has announced a strategic partnership with Nokia Siemens Networks which covers
network infrastructure, services and software.  Together, Pipex Wireless and
Intel will launch wireless services across the UK.



Pipex Wireless is now focusing on the commercial launch of the business which
will take place in Manchester later this year.  During 2008 commercial WiMAX
services will be made available in a number of additional cities as the network
expands in the West Midlands and the North West.  During this period Pipex
Wireless will also trial and launch a number of value-added products and expand
the routes to market and channel partners in order to deepen market penetration.



The regulatory environment within Europe for the spectrum has improved
significantly in recent months, and the division will continue to work with both
the regulator and the industry to optimise its position.



Peter Dubens, Executive Chairman of Pipex, commented:



"Over the past 3 years, Pipex has successfully transformed the scale and quality
of its Broadband and Voice customer base.  In the consolidating UK market,
today's announcement crystallises value for shareholders, and ensures that
Pipex's customers will continue to receive a wide range of competitive, high
quality communications and internet services.



"The strategic review announced in March remains in progress regarding the
Group's other businesses, which continue to show strong growth in all areas.
The Group is also reviewing options for the efficient distribution to
shareholders of the proceeds from the sale of the Broadband and Voice division.
Further updates will be provided in due course."


                                     -ends-

For further information please contact:

PIPEX Communications plc                                     020 7766 6909

Peter Dubens, Chairman

Mike Read, Chief Executive


Financial Dynamics                                           020 7831 3113

Juliet Clarke / Edward Bridges / Hannah Sloane


UBS Limited                                                  020 7567 8000

Michael Herbst / Craig Calvert


Collins Stewart Limited (NOMAD to Pipex)                     020 7523 8350

Hugh Field



UBS Limited is acting exclusively for the company and no one else in connection
with the transaction and will not be responsible to any person other than the
company for providing the protections afforded to customers of UBS Limited or
for providing advice in relation to the transaction or any other matter referred
to or contained herein.


                      This information is provided by RNS
            The company news service from the London Stock Exchange