ISP and Utility Firm Shell Energy UK Acquired by Octopus Energy
The Shell Petroleum Company, through its 100% owned subsidiary Impello Limited (“Shell”), has today caused no big surprises by announcing that the Octopus Energy Group has acquired its retail energy and broadband ISP business – Shell Energy (UK and Germany) – for an as yet undisclosed sum.
At present, Shell Energy UK is home to around 500,000 broadband and phone customers, as well as 1.3 million energy users. Some 2,000 UK people also work for the division. But the retail provider has faced plenty of challenges over the past few years (e.g. they lost almost £220m across 2020 and 2021), not unlike other energy providers, and thus Shell has been hunting for a way out (here).
Tariffs and offers will remain unchanged for all existing home energy customers, including continued access to 100% renewable power. Customer service will not be interrupted and, following regulatory approval and deal completion, both companies will ensure a seamless transfer of the businesses – and eventually brand (after a few months) – from Shell Energy to Octopus.
Advertisement
As part of the deal, Shell and Octopus have also signed a memorandum of understanding (MoU) to explore a potential international partnership to bring the best possible experience to their EV charging customers, including Shell Recharge subscribers.
Options will be explored for possible joint promotions and brand activations, alongside co-operation on out-of-home charging and other activities across the EV value chain. Shell is already a leading EV charging provider with a global charging network set to expand to around 200,000 public charging points by 2030.
Steve Hill, Executive Vice-President, Shell Energy, said:
“This agreement follows the announcement during our Capital Markets Day to divest our home energy retail business in Europe. To drive performance, discipline and simplification, we are prioritising countries, projects, and routes to market where we can deliver the most value. We will work closely with Octopus to ensure a seamless transition and continued high standards of customer service.”
The transaction is expected to complete in the fourth quarter of 2023, subject to regulatory approval, although questions remain over what will now happen to Shell Energy’s telecoms base (phone and broadband). Octopus Energy could divest that base and sell it off to another ISP, which is something that previous reports have indicated is most likely to occur.
However, it’s worth remembering that the Octopus Group are also the ultimate owner of investment firm Fern Trading, which itself owns several alternative full fibre networks and retail ISPs (e.g. Giganet, Cuckoo, Jurassic Fibre, Swish Fibre and All Points Fibre etc.).
Advertisement
As such, it’s not impossible that the base could find its way into Cuckoo’s hands as a primary retail ISP, but that would be a tedious transfer given Cuckoo’s recent move to focus on FTTP-only solutions. Shell Energy’s older ADSL/FTTC/G.fast broadband and phone base would be an awkward fit (they only have a few FTTP users).
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
« ISP BrawBand Expands its FTTP Broadband Reach in Scotland
Latest UK ISP News
- FTTP (6117)
- BT (3676)
- Politics (2757)
- Business (2463)
- Openreach (2433)
- Building Digital UK (2354)
- Mobile Broadband (2182)
- FTTC (2092)
- Statistics (1937)
- 4G (1839)
- Virgin Media (1795)
- Ofcom Regulation (1605)
- Fibre Optic (1483)
- Wireless Internet (1473)
- 5G (1437)
This might be a silly question, but does this mean Shell Petrol stations will become octopus? And does this sale mean Octopus is now and ISP?
Shell Petrol stations are not part of this, just the retail energy base under ‘Shell Energy’. As for the ISP query, we don’t yet know what they’ll do with that base once the deal actually completes.
Shell don’t own the petrol stations, they’re franchised by the Shell Group who remain active in upstream oil and gas which is where the real money is made, whereas retailing (whether domestic energy, forecourt fuels, or internet services) is generally a low margin, low skill business compared to the geophysics, logisitics, processing and trading of fossil fuels.
The company Octopus are buying is what was called First Utility before Shell took it over in 2018 and renamed it in 2019
https://www.shell.co.uk/media/2019-media-releases/first-utility-becomes-shell-energy-retail-ltd.html
Can’t wait for OctoInternet!
My ISP is Giganet and if you dig into their ownership, Octopus is a significant shareholder. I leave you to draw your own conclusions.
@jjh4yb
They’re very clear they are owned by Octopus. In fact Mark mentioned it up there – you didn’t need to dig into it. What are you trying to say?
That they have their tentacles in everything!
I have been involved with the M & A team on this and can confirm that the broadband business will be sold on. Probably to sky or Vodafone. talkTalk want to retain the customers on their network but their financial struggles prevents them being competitive.
Foolishly just signed up to Shell Broadband just gone live this week, not best start because it doesn’t work. I was Tempted by the cheap price and cashback offers. I hope they don’t go to sky! They destroyed BE broadband product.
“I hope they don’t go to sky! They destroyed BE broadband product.”
BE broadband destroyed itself in many ways way before SKY got involved.
Such things as forcing users to adhere to a FUP when they claimed to be an unlimited product. Promises of a fibre product that never came.
Along with numerous other things such as ignoring users problems.
Banning voices of discontent from their forums.
Oh and a user group full of what seemed to be kiss butts which thought the sun shone out of BEs you know what (not dissimilar to certain users of certain status on BT forums today).
The only ones that landed on their feet from that whole horrible bit of history was higher management at BE who have gone on to be involved in other fibre providers.
Rose tinted glasses view of history im afraid until you look back.
My brother is with Shell broadband and it works ok, the router is not great, but fine for his use, and the price is more or less what he will pay.
“I have been involved with the M & A team on this and can confirm that the broadband business will be sold on”
In which case they know the price of everything and the value of nothing. With TT for sale, the price for budget ISP customers will be very low (and wasn’t good in the first place), so the gains will be minimal. Octopus Group have both the systems and the business skills to manage an Openreach ISP. And it’s a multi-way cross sell, from Octopus Energy to a potential Octopus Openreach Broadband product, from the Octopus Broadband to Giganet where the footprint permits, from Giganet to Octopus Energy (and potentially retaining where a Giganet customer moves out of their existing service area). And for some customers, Shell’s multi-utility approach was something they liked – sell it on and those customers will gravitate to a company like Utility Warehouse.
Then again, most M&A is poorly executed and value destroying, because execs approach it like a kid with money in their pocket approaches a sweetshop. All the M&A I’ve ever been involved in has failed to deliver the dream. However, everybody got their bonuses, and execs were able to tinker “doing deals” rather than the boring work of organic growth or maintaining customer service. Presumably Octopus are becoming a standard corporate dullard, and losing the disruptive spark that enabled them to grow so fast in the first place.
Boo.
That must have cost Octopus a few Squid.
Boom-boom!
LOL.
Octopus have been very good on the energy side for me when Avro went under. However, I am not going to be tempted solely by price with my broadband.
I am with Aquiss and I like the fact that it is reliable and no need to contact customer service. Although any questions are answered quickly.
I am with Octopus energy, and they seem okay, prices are okay compared to others, they don’t nag me about getting a smart meter, well not yet. If they did keep their broadband and if Zzoomm was not here, I would think about changing to them for broadband, depending on prices. But since I doubt Octopus will keep the broadband and zzoomm is here, then I will nto be doing it 🙂
Octopus having a openreach provider with customers could be very useful. They could have an Octopus Broadband offering which could be nationwide,but also.leverage the altnets. They could even move customers(new and old) on to the altnet as their coverage expands. This might also be helped by some of the future altnet consolidation which is somewhat inevitable
I note the ‘Continued access to 100% renewable power’, which is not the same as ‘100% of the power supplied to you is from renewable sources’. I always wondered how they separated it out down the power lines. So, we will be with Octopus for BB and electricity. We’ll see what happens……
Hope it’s not sky they are an absolute shambles and a greedy company who is only interested in ripping people off