US telecoms firn Atlantic Tele-Network (ATN) has taken a majority stake in Bermuda’s KeyTech.

The move means KeyTech will combine with wireless services firm CellOne to create a major provider of mobile, fixed and international telecoms services on the Island and join CellOne’s mobile services and network with Logic’s CableVision brand for broadband, internet, phone and video services.

ATN will give KeyTech its existing shareholding in CellOne and $42 million in cash, while the US firm, which has jointly owned and operated CellOne with KeyTech for four years, will take a 51 per cent stake in KeyTech.

KeyTech shareholders will receive a one-time special dividend of 75 cents per share worth a total of $12.7 million, conditional on successful completion of the proposed transaction.

KeyTech CEO Lloyd Fray, said: “KeyTech and ATN, through CellOne, have spent nearly two decades investing in Bermudian infrastructure and services and now, joined under the same umbrella, will be able to invest even more heavily in Bermuda.

“KeyTech’s broad Bermudian shareholder base coupled with ATN’s significant and longstanding investment will help drive economic growth, while its local leadership team will be focused exclusively on delivering the best service and value for customers.”

He agreed that the tie-up would put KeyTech head-to-head with rivals Digicel in a two-way tussle for market dominance.

Mr Fray said: “In terms of the lines of services and offerings, yes.

“It’s no secret — this has been something which was predicted years ago when regulatory reform started to take shape — most providers at that time said services would consolidate.

“There are other players in the market ... but in terms of portfolio of services KeyTech and Digicel are certainly of that stature.”

He added that the new playing field also held out the prospect of improved products and cheaper services for customers.

Mr Fray said: “As a result of this transaction, KeyTech will benefit from an amount of $42 million in cash income — something which would have been very difficult to achieve on Island.

“It will allow us to continue to improve and expand both here and in the Caymans.”

And he added the joint operations would lead to “enhanced product options and a more efficient operation better able to offer highly competitive prices”.

Mr Fray said: “Having ATN as the level of player they are, it helps improve competition and what competition does is it protects the consumer because it provides them with the opportunity to choose a better product and potentially a cheaper product.”

CellOne shares held by minority shareholders in the company will convert into KeyTech shares so that CellOne will become a wholly owned subsidiary of KeyTech.

KeyTech will continue to be listed on the Bermuda Stock Exchange (BSX).

CellOne founder and chairman Kurt Eve said: “Since its start in 1999, CellOne has grown to be the leading mobile carrier in Bermuda, and I’m proud of the work that its employees have done to deliver excellence in service since that time.”

He added: “I believe that this is a very good transaction for the shareholders of both BDC and KeyTech and that the combined companies will have significant opportunity to increase growth and value.

“I look forward to the next chapter in CellOne’s evolution through this combination with KeyTech.”

KeyTech said the deal would offer Bermuda consumers a comprehensive selection of leading residential communication and entertainment services.

The additional capital from ATN will support continued investment in expanding and upgrading the communications infrastructure in Bermuda and the Cayman Islands, where the firm also operates, KeyTech said.

CellOne CEO Frank Amaral said: “This transaction will offer customers a single provider to meet all of their communications needs and preserve robust competition in Bermuda.

“We have a long history in Bermuda, and through this agreement we’ll be able do even more to amaze and delight customers with our enhanced and innovative product offerings.”

The transaction is subject to closing terms and conditions, including backing from KeyTech’s shareholders, approval from the Bermuda Regulatory Authority, the US Federal Communications Commission, and the Information and Communications Technology Authority of the Cayman Islands, as well as the consent of the Bermuda Stock Exchange relating to some details of the deal.

KeyTech will provide more information to shareholders and schedule a date for a meeting of shareholders within 30 days.