The great freephone fiasco

BT sold a telephone number for pounds 100. They want it back. It'll cost them pounds 200m. Nick Gilbert reports

What's in a collection of digits ? Read this out aloud quickly: 0800 192 192. Now try this: 0800 19 21 92. In the difference lies the rise of Freepages, a company which is capitalised at a remarkable pounds 200m or so, though it is yet to turn a penny in profit.

If after 0800 you read out one-nine-two, one-nine-two you will notice the evident similarity to British Telecom's one-nine-two - the easy to remember number for directory inquiries.

Now suppose you were planning a telephone classified directory information service to rival BT's own Talking Pages. Getting hold of one-nine-two, one-nine-two would be like winning the six-figure lottery.

The man who won, Nigel Robertson, in fact scored an eight-figure triumph. His shareholding in Freepages is currently worth around pounds 29m. Last year Robertson quit as chief executive of Freepages to go into tax exile in Monte Carlo. He is 34 years old. Five years ago he was running a modest- sized advertising agency.

Robertson dreamed up the number. A company he was connected with applied to BT to get it. BT provided the number in the Spring of 1993. The cost of such a powerful set of digits? About pounds 100.

Sleeping giant BT then woke up to find the number gone and tried to get it back. In May last year BT in effect admitted defeat after three years of wrangling in the High Court ... 0800 one-nine-two, one-nine-two stayed with Freepages.

How Freepages got the number - and kept it - is a remarkable saga involving breathtaking cheek, entrepreneurial skill, offshore money ... or, as British Telecom at one stage tried to make out, skulduggery, betrayal and manipulation.

That view is brushed aside by Simon McDaide, a man closely involved in the early stages of the saga, who says: "BT are protectionist, have huge sums to fight legal battles and don't like opposition."

The saga teeters on the edge of black comedy. In March 1993 Nigel Porter, then a BT salesman who was helping his customers apply for 0800 numbers, filled in an internal memo not with 192 192 but with that innocuous seeming number 19-21-92 (nineteen, twenty-one, ninety-two). That at least was what BT said in one of the more polite allegations it tried to level against Porter. Porter denied attempting to pull the wool over his employer's eyes.

Porter was at the time the BT salesman liaising with National Connect, a now defunct company which back then had business links with Freepages, at that time known as Timeload. Robertson and Jonathan Bushby, his equally youthful partner, handled the advertising for National Connect, whose managing director at the time was McDaide.

"I used National Connect as a vehicle to apply for the number," says Robertson. The two men spotted the potential and the winning 0800 192 192 combination was then sold on to Timeload which Robertson and Bushby took over in March 1993.

Once Freepages had 0800 192 192 it began to sign up commercial customers who wanted to be included in its telephone service. Customers wanting, say, a florist can dial the toll free 0800 number and are given three to choose from in their area. Freepages makes its money from the fees charged to the three florists. BT itself benefits since Freepages pays the phone company for all those expensive 0800 calls.

The company began to advertise, making great play on the 192 element, proclaiming that the service would start up in October 1993.

BT, belatedly alert to the loss of the number, suspended Porter on full pay in August. In September it tried to pre-empt the Freepages launch warning it would cut off the number. Freepages went to the High Court to ensure it kept it. Battle was joined.

According to McDaide, a former managing director of National Connect, BT told the court that it had the right to cancel the service since the number had been given out by mistake. BT's attempt failed.

The phone giant also made allegations of a "purported signature" on an internal form and an "unauthorised entry" on a computer terminal.

Porter denied the allegations which BT ultimately dropped in the peace deal struck last May. After internal disciplinary proceedings had been started, Porter left BT and started industrial tribunal proceedings against his former employer. He withdrew them later.

According to McDaide, BT gave Porter a reference and paid him compensation. BT will not comment on any aspect of this affair, citing the confidentiality terms of the peace deal. Porter will not comment either.

McDaide maintains that Porter is the son of a former senior BT executive. Asked about this remarkable twist in the tale BT spokesman Paul Sharma said: "We can't comment on this either because of the Official Secrets Act."

"We didn't offer Porter anything," says Bushby. "I think quite a number of BT people signed off on giving the number out without realising or thinking what was happening."

According to Bushby "it was more of a cock-up than a conspiracy". McDaide agrees. "The order for the number went though about seven different people but I don't recall BT making allegations against them."

Bushby points out that Freepages has had no problems at all with Mercury which was happy to provide the company with its Freecall number 0500 192 192. "It's a good business for us," says Mercury spokeswoman Nicola Wynne, confirming an "amicable" relationship with Freepages.

Mercury says the overall market for 0800 and 0500 numbers is worth pounds 300m annually and is growing 20 per cent a year in the UK.

The happy prospect of sharing in this revenue bonanza did not console BT. Still struggling to get its hands on the digits, BT alleged in early 1994 that Freepages representatives were confusing potential commercial customers by hinting the service was linked to the quasi-monopoly.

BT set up what it called "trap interviews". Private eyes were hired. Volunteers were fitted up with wiretaps to record what the Freepages reps told them.

"A Talking Pages rep came in the day after a Freepages rep and I told him about it," recalls Steve Burton, owner of the Activ Sports shop in Folkestone. "I set up a second meeting with Freepages and a private investigator wired me up."

Other "trap" interviews took place in the Spring of 1994, McDaide recalls. On occasion some of the reps were vague in describing the exact status of Freepages. On others, reps who were asked if the company was part of BT bluntly and accurately stated that Freepages was a competitor.

"In any sales force you may get the odd person on the road getting commission saying something silly," says Bushby. "But we didn't condone it and we showed documents in court that made the position clear."

Not only Freepages but entrepreneurs connected with it have found their names in the newspapers recently.

Chris Akers, a Freepages shareholder and chairman of Caspian Group which owns Leeds United, was interviewed by Department of Trade inspectors last year. They were looking at share trading in Blagg plc, the quoted company Akers then chaired and which Freepages in effect took over in February 1996 as a way of getting its original UK stockmarket listing.

"They interviewed me in April 1996 and I have heard nothing since," said Akers. "They were not looking at my purchases of shares."

Then six weeks ago Freepages's largest shareholder, Ronald Zimet, was dragged into the debacle surrounding Andrew Regan's failed takeover attempt of the Co-operative Wholesale Society. Zimet stepped down as chairman of Freepages after a wave of adverse publicity, though he provided most of the start-up cash for Freepages and still controls pounds 30m worth of shares.

The Serious Fraud Office is investigating a pounds 2.4m payment which food company Hobson, then run by Regan, made to Zimet's offshore company Trellis International, expressed to be for his help in securing a long term Co- op contract.

Zimet and his money arrived at Freepages at a time when its legal battles were proving costly. It is no small irony that he was introduced to the company via connections at Swiss Bank Corporation. Its investment banking offshoot SBC Warburg a few weeks ago played a major role in destroying Regan's credibility as a bidder for the Co-op.

According to Bushby, he and Robertson knew Akers, who had moved from advertising to the City and was then working at SBC in London. Akers in turn worked with another SBC corporate financier, Robert Bonnier, a young Dutchman who introduced Zimet to Freepages. Bonnier himself quit SBC to join Freepages in February 1995. The wealth creation scheme that is Freepages has been kind to Bonnier too. Just over two years later Bonnier holds shares worth nearly pounds 12m and is chief executive of Freepages. He is 27 years old.

Zimet's company Trellis invested pounds 350,000 in Freepages shares in January 1994. Over the next three years Zimet or his companies lent Freepages amounts that varied from pounds 200,000 to pounds 500,000. Zimet's money was clearly vital. For at one stage the offshore investor held just over 50 per cent of Freepages ordinary shares.

Over the next couple of years other investors bought in, among them a group of Dutch investors including Bonnier and his father. In February 1996 Freepages reversed into Blagg plc. In March this year the company raised pounds 43m net selling shares at 47.5p and also gained a quote on Nasdaq. Freepages shares have drifted lower since then to 41p but they are still up 50 per cent on a year ago.

There is a lot of hope value in the price. In the six months to 31 March this year Freepages revenues were five times higher at nearly pounds 6m but the fast-expanding company lost pounds 5.9m pre-tax.

And the price of BT of getting that famous number back? Little short of pounds 200m, Freepages's current stockmarket valuation on the Alternative Investment Market. Ironically, in 1994, Bernardette Mee, a trade mark agent who worked for BT had given her opinion that: "The long term prospects of Freepages Ltd ... do not appear to be good."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent