News

Pipex dangles WiMAX bait to attract buyout investors

by John Oates | posted on 12 March 2007

The UK's independent ISP market just keeps on shrinking, with Pipex hawking itself around looking for a buyer.

Weekend reports said Chairman Peter Dubens has appointed bankers UBS to find a buyer for the firm, however the company itself is refusing to comment.

Dubens announced a review of business in January to decide the best way forward.

Pipex confirmed the reports this morning, saying the bankers were examining a number of strategic options, including a possible sale.

Pipex shares are down almost two per cent today, but enjoyed a big rally last week. The company has a market cap of £335m and claims over half a million broadband customers.

Independent ISPs are struggling to compete with the big brands like Virgin, Sky, and the various mobile companies who offer a bundle of services.

With mobile and cable operators chasing each other to add strings to their triple or quadruple-play strategies, there should be no shortage of bidders. Several companies have upset customers by buying into the broadband market without an adequate technology partner.

We would normally include some financial filler at this point, but the investors section of Pipex's website seems a little tired at this point.

Guy Kewney writes:

Pipex has been hyping its value for some months now, on the basis that it owns a bunch of radio spectrum of incalculable value. The value, unfortunately, depends on the parallel hype for WiMAX.

What it boils down to is that if WiMAX takes off on a major scale, and if Ofcom manages to make a mess of recycling old analogue bandwidth as WiMAX, then (and only then) people could buy alternative WiMAX spectrum by buying Pipex for many times what it would be worth as a run-of-the-mill Internet service provider.

Nobody has had anything specially kind to say about Pipex's ISP business for some years.