Embargoed for release at 10:45am

3 February 2010

Phoenix IT Group plc

Phoenix IT Group partner with KCOM Group

Phoenix IT Group plc, ('Phoenix' or the 'Group'), the UK IT services company, today announces that Phoenix IT Services has reached a multi-year agreement with KCOM PLC to provide field engineering services for their Managed Services customers. Under the terms of this agreement, approximately 142 staff will transfer into Phoenix IT Services effective from 1st March 2010.

In addition the UK IT services company has reached agreement with KCOM Group plc ("KCOM") to acquire the entire issued share capital of Aghoco 1000 Limited ("Aghoco"), a wholly owned subsidiary of KCOM containing certain field maintenance support contracts.  Completion of this acquisition is expected to take place by the end of February.

The contracts contained within the terms of the acquisition will be managed by Servo, the Groups Mid Market Services Division. Subject to adjustment to reflect the level of working capital at completion, Aghoco is being acquired on a cash and debt free basis for a consideration of £1.8 million, which will be satisfied in cash on completion.

It is expected that this acquisition will be profitable from the outset. 

Commenting on the acquisition and outsourcing contract, Nick Robinson, Chief Executive of Phoenix, said: "This important outsource agreement and acquisition of new contracts will greatly strengthen our long established position in the Network arena. The multi platform skills that we are acquiring will significantly enhance our capabilities in this area and will enable us to expand our activities into voice support and to take full advantage of the growing trend for converged technologies."

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