Telefónica Tech acquires Microsoft partner Incremental for up to £175 million

Telefónica Tech acquires Microsoft partner Incremental for up to £175 million

Telefónica Tech is announcing the acquisition of Microsoft Inner Circle partner, Incremental, for up to £175 million including potential contingent payments linked to its future performance. To become the number one cloud transformation partner for its customers. Thereby delivering next-generation modern workplace experiences, trusted enterprise security services to protect apps in a data and hybrid cloud world.

The acquisition increases Telefónica Tech’s scale and competencies in Microsoft technologies with 16 Gold Competencies and 5 Advanced Specialisations. Making it one of Microsoft’s largest partners in the UK. With these capabilities, Telefónica Tech consolidates its leading position in the UK market, considered to be the largest and fastest-growing IT services market in Europe.

Incremental Microsoft partner UK Telefonica

Launched in 2016, Incremental Group has two key specialised business areas. It is one of the leading Microsoft Dynamics Partners in the UK and is also a major player in the Data and Analytics market. It has been a Microsoft Business Applications Inner Circle member for the past three years and is one of only two partners in EMEA on Microsoft’s Global Advisory Board for data analytics.

Incremental Group has experienced significant organic and inorganic growth in recent years. In early 2021, Incremental acquired Redspire to expand its capabilities in the financial services market and become one of the largest Microsoft Dynamics partners in the UK. In October 2021, it acquired data analytics company Adatis, enabling the group to deliver end-to-end digital transformation to customers.

It is headquartered in Glasgow, although it has offices throughout the UK, as well as capabilities in Bulgaria and India. In total it has more than 350 employees which bring Telefónica Tech UK&I’s headcount to around 1,000 employees. The UK subsidiary thus contributes almost 25% of Telefónica Tech’s global workforce.

Incremental, one of Microsoft’s most significant partners in the UK

The amount of the transaction implies valuing the company at 13.7 times its gross operating profit (EV/OIBDA) and 14.2 times its operating cash flow (EV/OpCF), considering their results expected for the next fiscal year and excluding potential synergies.

The addition of Incremental’s business applications, power apps, data analytics and management capabilities 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.

José Cerdán, CEO of Telefónica Tech, comments: “We warmly welcome Incremental Group, and are delighted that 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.”

Neil Logan, the current CEO at Incremental Group, says: “I am immensely proud of what Incremental has achieved since our inception a little over 5 years ago.  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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