US deal maker with a knack for the telecoms business

Ken Peterson is beginning to enjoy his trips to the Republic.

The US entrepreneur, who in the past three years has begun building an Irish-based telecoms empire, is a fan of Gaelic football, and even the Irish weather.

"[ GAA] is fairly complicated," says Peterson, who admits he has few hobbies.

"But I like it a lot better than American football and the stadium is fantastic."

Like many of his American compatriots Peterson can trace his roots back to Ireland. His great, great grandfather on his mother's side of the family was Irish, although he knows of no relatives still living in the Republic.

Yet this hasn't dampened the former lawyer's interest in the Republic, where he has bought two telecoms companies and recently begun building a third.

"I was first attracted to Ireland through the deal I completed to buy Hibernia Atlantic - a fibre optic cable linking the US and Ireland built at a cost of $800 million [ €600.41 million]," says Peterson, who had already bought an Icelandic telecoms firm called Halo before buying the cable for $17 million.

Peterson, who made his name in the US by buying aluminium plants at the bottom of the economic cycle and later selling them on when prices recovered, began taking an interest in telecoms just as the telecoms bubble burst in 2000. His company, Columbia Ventures Corporation, had recently sold a number of aluminium businesses at a profit and he had cash to buy on the cheap.

"After making hundreds of millions of dollars from the aluminium deals I had a three year non-complete clause and needed to look for something else to do.

"I wasn't ready to retire. I have few hobbies and I don't play golf. But I really enjoy business, particularly putting deals together," he says. "I was quite interested in telecoms and was attracted to learning about a new area."

The telecoms crash was a key motivating factor as it fitted one of Peterson's core investment strategies - buying into companies in distressed situations and trying to turn them around.

"I often make an investment when there is blood on the streets," says Peterson, who admits he was surprised that he managed to buy Hibernia Atlantic from the bankrupt Canadian company 360 Networks.

"I kept expecting one of the big strategic players to come in and take it," admitting that an initial problem of connecting customers to key British cities via the cable has only recently been solved.

The purchase of the transatlantic cable was followed swiftly by investments in a range of US telecoms firms. He has also amassed a 10 per cent stake in the Scottish telecoms firm Thus, which unsuccessfully bid to merge with the British telecoms company Energis last month.

Peterson fully supported the merger, which was proposed by Thus. It would have been a much better deal than the one recently agreed between Cable & Wireless and Energis, he forecasts.

Hibernia Atlantic, which bases its headquarters in Clonshaugh, Dublin, offered Peterson his first taste of Ireland back in 2003.

"The business climate is fairly robust . . . but I think I was drawn to Ireland initially because it seemed to me that there was very little utilisation of broadband at a consumer level," says Peterson.

"It was amazing. Iceland, a country of 280,000 people, had more broadband connections than Ireland at that stage. This prompted me to invite the managing director of my Icelandic telecoms company to Ireland to put together a business plan."

The result was the foundation of Magnet Networks, a company which teams up with property developers to lay fibre cabling into people's homes. These cables enable Magnet Networks to offer a triple play of television, broadband and telephony. It is also planning to launch similar services using Eircom's copper network by utilising a new broadband technology ADSL 2+.

Earlier this year Peterson added the wireless operator Leap Broadband, which is owned by the Ardagh brothers, Rory and Charlie, to its Irish portfolio.

"We got this because of the gaps and costs involved with the local loop system. It was a good fit with good people," he says. "We have some experience of wireless in the US also."

Peterson's investment firm Columbia Venture Corporation has amassed telecoms assets worth between $450-$500 million in just five years. But he says that he is not looking for a sale and is aiming to build up the 12 separate telecoms businesses.

He cites the 17 years that he used to build up his aluminium empire as evidence of his long-term focus.

This commitment could prove crucial if Peterson is to unlock the telecoms sector in the Republic, which remains dominated by the incumbent Eircom.

"Being a new entrant is always a tough position," adds Peterson. "But with the rate of housing growth, and our deals with developers Magnet should have tens of thousands of connections soon."

If this occurs, Peterson can enjoy his time in the Republic even more than he does already.