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Shell, Sky and TalkTalk Eyeing Post Office Telecoms Acquisition

Friday, October 23rd, 2020 (8:16 am) - Score 11,448
postoffice uk broadband

Several UK ISPs including Shell Energy, Sky Broadband and TalkTalk are today reportedly all being named as the “remaining bidders” for the Post Office’s telecoms division, specially its base of around 500,000 broadband and phone customers – said to be valued at around £100m.

The situation arguably began last year (here) after the Post Office put out a Prior Information Notice (PIN), which sought suppliers for a “range of goods and services in order to continue to provide telecommunications services” to consumers (prior to this they held a managed service agreement with TalkTalk’s Wholesale division).

Since then we’ve heard very little from the provider (it’s unclear if they found a new supplier or not) and they’ve yet to launch any “ultrafast broadband” packages. Suffice to say that more than a few questions have been swirling around the future direction of the Post Office’s telecoms division this year.

According to “sources” at Sky News, the provider’s customer base now appears to have become the subject of a possible bidding war between three providers – Shell Energy, Sky Broadband and TalkTalk. Shell Energy, which is home to around 130,000 broadband customers, was only fairly recently established in 2018 through the acquisition of First Utility and they’re currently seeking further growth.

Meanwhile TalkTalk is in a slightly more awkward position given the recent non-binding £1.1bn takeover proposal from Toscafund Asset Management (here), which seems highly unlikely to have factored in a potential acquisition of customers from the Post Office. Nevertheless, TalkTalk’s existing relationship with PO would appear to place them in a good position and it could be seen as a quick way to boost their value.

As for Sky’s interest, that one is a little bit harder to judge, since we’ve seen no indications that they’ve been looking to grow their telecoms base through further acquisitions. Not that it would hurt, but right now Shell and TalkTalk simply seem to be the two parties with the clearest interest, and perhaps need, in such a deal.

Meanwhile Nick Read, CEO of the Post Office, is alleged to have indicated, albeit unsurprisingly, that he would not sell the division unless it secured an attractive price for it. All of the parties have declined to comment.

Leave a Comment
10 Responses
  1. Avatar Roger_Gooner says:

    I’m a little surprised that Vodafone isn’t in the bidding. It’s hard work to grow your broadband base organically and opportunities to acquire 500,000 broadband and phone customers comes along only occasionally.

    1. Avatar cdh1981 says:

      Acquiring a business doesn’t automatically mean you’ll keep the customers of that business. Indeed Vodafone are well known for having horrendous technical support on the ADSL/FTTC side of things, so many customers might jump ship if their existing supplier was acquired by them and rolled into their network.

      Also I think Vodafone are more focussed on FTTP right now in their primary partnership with CityFibre, and to a lesser extent with Openreach. A few hundred thousand customers on the FTTC side is probably of little interest.

    2. Avatar Alex Hardie says:

      100 million British pounds for 500,000 subscribers? Is that number correct? That works out to $260 a subscriber…

  2. Avatar Richard says:

    Consolidation is not good for competition.

    Wonder what’s going on with the talktalk bid

  3. Avatar Pat says:

    Post Office moved the base away from Talk Talk Business to Vodafone last year

    1. Avatar Paul says:

      No they didn’t it’s still prominently with TT with some on Openreach (mostly phone only customers).

    2. Avatar Pat says:

      Yes they did

    3. Avatar John says:

      They certainly are still with TTB.

    4. Avatar Paul says:

      I work at Fujitsu and we provide a Managed Service for Post Office Telecoms and can guarantee it’s still with TTB

  4. Avatar John bob says:

    A few hundred thousand customers is of little interest but way less with shitty…I mean city fibre is their focus? Sounds retarded

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