Centrica is in negotiations to buy bankrupt telco One.Tel’s UK business.
UK utility Centrica is in negotiations with bankrupt telecoms carrier One.Tel over buying the Australian firm’s UK business, which offers low-cost international phone calls. The business, which is profitable, would be sold for approximately E100 million. Although Centrica isn’t the only potential bidder, the Financial Times reports that it is in advanced negotiations and could well announce a deal within a week.
Centrica, formerly the incumbent gas monopoly, has managed to turn itself into the country’s largest electricity supplier as well. It has also acquired leading road services firm, the AA, and has one of the most successful Internet banking operations in Goldfish. Now, it’s trying to build on this both by further increasing its UK range and by expanding internationally.
The utility has set itself a target of one million telecoms customers by the end of the year. It currently has 400,000 – a rise from just 150,000 in January. One.Tel’s 650,000 UK customers would help it meet and exceed this target with ease.
A potential problem is that while there would be synergies, particularly in billing and marketing, there’s a danger that the two client bases wouldn’t overlap ideally. One.Tel’s customers are currently young people making international calls. But these customers are most likely to live in shared houses and not be solely responsible for utilities bills, and so will have less incentive to switch than almost any other demographic group.
However, in the longer term this could work to Centrica’s advantage. It would improve the firm’s mindshare among the wealthy householders of tomorrow – and it would also build its profile internationally. Many of One.Tel’s customers are highly internationally mobile, and as Centrica has set itself ambitious targets for expansion in Europe and the US this could again drive brand awareness for the future. Overall, it looks like One.Tel might well be one telco worth buying.
