Hull telecoms company KCOM set for £500m takeover

Hull is unique in the UK having a telephone system which uses cream, not red, phone boxes

Hull-based telecoms company KCOM - famous for its cream-coloured phone boxes - looks set to be taken over by one of Britain's biggest pension funds.

Universities Superannuation Scheme Ltd (USSL) has agreed to buy the struggling company in a deal valuing it at £504m.

News of the deal boosted KCOM's share price by about a third to 97p.

More than 50,000 people in Hull bought shares in KCOM when it floated on the London Stock Exchange in 1999 with a share price of 225p.

The company provides voice and internet-based services to 140,000 consumers and businesses across the city of Hull - the only part of the UK where larger rival BT does not have a presence.

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The takeover deal is being recommended for approval by KCOM's shareholders.

It comes after the company issued a profit warning late last year that was followed by a string of management changes, including the replacement of its chief executive and finance chief.

In its half-year report last year, KCOM reported a fall in profits, while net debt soared 60% to £108.5m due to investment in infrastructure across its Hull and East Yorkshire network.