Chess Telecom to keep making acquisition moves

VAR Chess Telecom has revealed it will continue its acquisition activity after confirming it has secured additional financial backing.

CRN exclusively revealed last week that Chess had made its 14th acquisition after buying part of the customer base of Manchester-based VAR The Telecoms Group.

Chess has now secured additional funding from The Royal Bank of Scotland, with private equity backing also a possibility in the future.

Richard Btesh, director of corporate finance at Chess, told CRN: “We have been given structured bank finance solely for acquisitions because we have proven we can successfully make acquisitions. The Royal Bank of Scotland has seen how our model works and the money we have been given is in the low millions.”

Btesh added that the funds will be used to make four to five reasonable sized acquisitions alongside some smaller purchases.

“Raising funds from private equity backing may be the next stage, but we want to spend this money first,” he said. “We want the same type of acquisitions as before: UK-wide, fixed-line, mobile and broadband resellers.

“We are still focused on the SME market where a lot of customers spend less than £200 a month. This is a good market to be in.”

Matthew Ball, research analyst at Canalys, said: “It is always good to see firms being brave and making acquisitions. We are seeing more of these ‘super VARs’ such as Chess making noise in the market.”

Ball added that as technology such as voice, data, mobile and video continues to converge, resellers need a wider skill set. Acquisitions are one method of achieving this aim.

“It is a good idea to acquire customer bases, but it depends on how much profit you make from the customers,” he said.

>> Further reading:

Chess makes 14th acquisition

Chess makes move on UWT