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XLN plans growth on new equity funding

Michael Garwood
October 13, 2010

Reseller XLN Telecom claims it has the funds to double in size after ECI Partners became its majority shareholder last week and promised it “significant” acquirement funds

London-based fixed line reseller XLN Telecom, which also runs an MVNO proposition via a Three wholesale deal with Gamma Telecom, saw ownership change as previous leader Zeus Private Equity sold its “60 per cent plus” stake to ECI Partners.

Zeus invested around £6.63 million in to XLN Telecom as part of a management buyout in January 2008. It invested a further £2 million to support its acquisition of OneBill Telecom last year, which boosted its customer numbers by around 20,000.

Details on the new share value sale have not been disclosed.

XLN Telecom was founded in 2002 by group chief executive Christian Nellemann (pictured). It targets businesses with one or two connections typically. Its base stands at 125,000 customers. It has doubled turnover to £54 million in two years. Profit stood at £13 million, up 800 per cent, in 2009/10.

In July, XLN Telecom won an award for best private equity backed team of the year in the British Venture Capital Association Portfolio Company Management Awards.

Nellemann told Mobile News XLN Telecom is in early discussion with three companies about acquisitions.

Nellemann said: “By taking a completely fresh approach, we have been able to transform a niche and historically overlooked sector of the market. We have been able to achieve this by combining best quality products with best value pricing and industry leading customer service standards.

“We now have a highly profitable and scalable business that will allow us to rapidly expand the range of services we deliver to the small business market. We are delighted that ECI will be a key part of the business’s exciting next chapter given the opportunities for consolidation within our sector.”

Tom Wrenn from ECI Partners said: “XLN has considerable scope to add more products and services and is in an excellent position to act as a platform for consolidation in the fragmented telecoms market.  We are delighted to be backing this excellent team and to provide additional capital to continue to grow the business.”

Tony Dickin from Zeus said: “XLN has been able to take advantage of a highly fragmented sector and position itself as a market leader in the SME telecoms space. Under the leadership of chief executive Christian Nellemann, XLN has experienced exceptional growth over the past two years and I wish the business all the best for the future in its partnership with ECI.”

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