Telefónica Tech Buys UK Analytics Firm And Microsoft Favourite Incremental For £175m


By James Blackman

Telefónica Tech, the digital change unit of Spain-based operator Telefónica, has acquired UK-based digital transformation and data analytics company Incremental for £175 million(US$230.7million). Incremental, a major Microsoft partner in the UK, will be integrated into Telefónica Tech business in the UK and Ireland.

In the past 12 months, Telefónica Tech has acquired Spain-based multi-cloud service provider Altostratus Cloud Consulting, UK-based cloud and digital services company Cancom UK&I (now Telefónica Tech UK&I), and Spain-based software firm Geprom to reinforce its capabilities in Industry 4.0. Its revenues increased by 33.6 per cent in 2021, nearing €1 billion, and consolidating its position as a growth engine for Telefónica.

The new £175 million transaction values the company at 13.7 times its gross operating profit (EV/OIBDA) and 14.2 times its operating cash flow (EV/OpCF). The fee includes contingency payments linked to the future performance of the business, as part of Telefónica Tech. With the acquisition, Telefónica Tech expands its headcount in the UK and Ireland to 1,000 staff, which represents almost 25 per cent of the unit’s total workforce. Incremental Group is based in Glasgow, in Scotland.

Incremental Group, founded in 2016, is a member of Microsoft’s ‘Inner Circle’ club for business applications providers, and is one of only two companies in the EMEA region on Microsoft’s advisory board for data analytics. It acquired Glasgow-based Redspire in early 2021 to expand its capabilities in the financial services market, and data analytics company Adatis in late 2021 to enable it to deliver “end-to-end digital transformation” to customers.

A statement said: “With this new acquisition, Telefónica Tech significantly increases its scale and competencies in Microsoft technologies… [and] consolidates its leading position in the UK market, considered to be the largest and fastest growing IT services market in Europe. The addition… to Telefónica Tech UK&I’s cloud services portfolio will enable it to enhance the end-to-end cloud offering for mid-market, large enterprise and government customers.”

Chief executive at Telefónica Tech, José Cerdán, said: “This acquisition enables us to strengthen our position as a leader in the UK market for IT services. We are now able to provide end-to-end Microsoft services, including digital transformation, managed services and data analytics, and achieve attractive cross-selling synergies with Telefónica Tech UK&I, complementing and positioning us as a leading Microsoft-focused company in the UK.”

Current chief at Incremental Group, Neil Logan said: “As we looked ahead to the next stage of our development, it was important that we secured Incremental the right support for the long term. Becoming part of Telefonica Tech propels us into the next phase of our journey and enables us to further scale the business, creating exciting opportunities for our people and our customers.”

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