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Carphone swallows Onetel, Tele2

It's good to Talk Talk

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The Carphone Warehouse is splashing out more than £150m to acquire Onetel and Tele2 as part of ambitious plans to challenge the dominance of UK telco BT.

Once the deals are completed both companies will be rebranded to Carphone's TalkTalk phone service giving its 2.4m voice punters the ability to call one another for free.

And it will add even more momentum to Carphone's plans to invest in local loop unbundling (LLU) and provide telecoms services direct to end users.

"Our goal is to become the number one alternative residential telecoms provider in the UK market," said Carphone announcing the deal.

"The acquisition of Onetel propels us clearly towards that position and gives us a substantial platform of profitable voice customers from which to launch our drive into the broadband market in 2006.

"It also allows two major competitors to join forces in their bid to deliver improved value and service to residential customers."

Carphone is paying £132m for Onetel, which was put up for sale in September by parent Centrica. Of that, £95m pays for Onetel's residential and business operations, with £37m relating to British Gas (also owned by Centrica) recruiting more punters for TalkTalk over the next three years. A further £22m could also be paid out if Centrica hits sales targets.

Onetel has more than a million voice punters, some 60,000 broadband users and 40,000 mobile customers. The deal is expected to be completed in the next couple of weeks and is tipped to increase Carphone's pre-tax profits next year by around £20m.

Speaking today Centrica chief exec Sir Roy Gardner said that Onetel had become a "significant residential fixed line competitor to BT".

"However, as we have made clear for some time, global energy markets are changing rapidly and we want to focus closely on growing our core energy and related services operations in the UK and internationally. We will continue offering telecoms services to our British Gas customers, but we don't need to own Onetel to do this," he said.

Separately, Carphone also announced today that it had snapped up Tele2 - which has some 188,000 customers in the UK and 36,000 punters in the Republic of Ireland - for £8.5m. ®

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