Easynet Separates from Its Network as BSkyB Sells Business Division

Event Summary

July 21, 2010 – Easynet and BSkyB have reached an agreement to sell Easynet Global Services and its subsidiaries to UK private equity company LDC, subject to regulatory approval and a works council consultation. LDC will pay BSkyB GBP 100 million. BSkyB will retain ownership of all network assets. The proposal includes a long-term supply agreement granting Easynet access to BSkyB’s fibre network. LDC, which is fully funded by the Lloyds Banking Group, is backing current Easynet CEO David Rowe and his management team.

Quick Take

Analytical Summary

• Current Perspective: Negative on Easynet’s selloff to LDC, because although Easynet Global Services has a good reputation for delivering network solutions and strong customer service, separation from its network is a severe blow. It will be a hard sell for Easynet as a VNO both in the UK and internationally against tough competition from larger operators (e.g., BT, Verizon Business, Colt) with large, wholly owned networks. Easynet’s network is now separately owned by a consumer-focussed media giant.

• Vendor Importance: Very high to Easynet Global Services, because the company will have to adopt to a new way of marketing and providing its services. Its network was one of Easynet’s strong selling points, and this has now been significantly weakened. The disruption of the selloff is something Easynet has to navigate with minimal disruption, but it also provides opportunities for Easynet to renew its focus on purely business services and establish its independence from BSkyB.

• Market Impact: High on the pan-European and (particularly) UK telecoms markets, because although Easynet is a small provider, it has an impressive customer base (e.g., Sharp, EDF, Bridgestone) and a competitive range of IP VPN, local access and telepresence services. Competitors will be keen to cherry pick Easynet’s customers during the disruption of the selloff and an independent Easynet will present an interesting acquisition target for companies looking to expand their presence in the UK and pan-European markets.

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