United Utilities to sell call centre arm

United Utilities, the North-west water and electricity company, yesterday hung a for sale sign over Vertex, its call centre and outsourcing division.

The business has already attracted interest from a number of private equity and trade buyers and UU hopes to raise between £200m and £250m from the disposal.

Philip Green, UU's chief executive, said that Vertex, created six years ago to win customer service business outside the water and electricity sector, was no longer seen as core to the group's main business of owning or operating utility networks and accounted for only 5 per cent of revenues.

He was speaking as UU reported a 14 per cent increase in underlying first-half pre-tax profits to £282m, helped by a 9 per cent increase in water bills.

Vertex contributed operating profits of £3.5m in the period, down from £8.1m in the first half of last year. UU attributed the sharp decline to start-up costs on a number of new contracts, including a large outsourcing deal with Thurrock Council. Other Vertex clients include Westminster Council and the Department for Work and Pensions.

The core utility division, which operates the Manweb and North West Water networks, increased operating profits by 9 per cent to £380m. Mr Green said it was hitting the targets for operating expenditure and capital expenditure set by the regulators. The group has the biggest capital investment programme in the industry and expects to spend around £900m this year.

UU's contract solutions division runs water networks in Wales and Scotland and also the north-west gas network. Mr Green said growth was likely to come from UU winning more non-regulated business from other utilities. Only 9 per cent of the market for running water, electricity and gas networks is outsourced but UU has about 60 per cent of it.