One.Tel sells UK unit to Centrica for £58m

Centrica more than doubled the size of its fledgling telephone business yesterday after buying the UK operations of One.Tel, the Australian telecoms business that collapsed in May, costing its two founders, the media heirs James Packer and Lachlan Murdoch, £380m.

The British Gas to AA road services group is paying £58m for One.Tel UK, which has signed 650,000 customers since its launch three years ago and made about £8m profits on sales of £100m in the year to 30 June.

The acquisition will increase Centrica's telecom customers to more than 1 million. British Gas Communications, which was launched last September, has 400,000 customers.

Ian El-Mokadem, the managing director of Centrica Telecommunications, said the One.Tel deal was a "significant step" towards helping it achieve its target of 2.5 million customers – a tenth of the UK residential market.

Both British Gas Communications and One.Tel are "resellers", which means they do not own telephone networks of their own but buy capacity from other operators of mobile and fixed-line networks at a discount, then sell it on to their customers, enabling them to make cheaper calls.

British Gas Communications customers have a box fitted to the existing telephone connection in their home that automatically routes calls through at the cheaper rate. But most One.Tel customers have to dial an access code first.

Centrica said it would keep the One.Tel brand and its 600-strong workforce, which is mainly based at Chiswick in west London. Chris Weston, the managing director of One.Tel, will also remain.

The proceeds from the sale will be used to pay off the parent company's debts. One.Tel in Australia called in administrators on 29 May after running up debts of A$600m (£225m).

Ernst & Young advised in the UK deal.