Centrica picks partners for telecoms push

Lucy Baker
Thursday 15 August 2013 23:33

Centrica, the UK's dominant gas supplier, yesterday said that it would branch out into the telecoms sector through a series of partnerships with leading phone companies.

Shares in the utilities group jumped 10.5p to close at 226.75p, valuing the company at about £9bn, after it unveiled alliances with Vodafone AirTouch, the world's biggest mobile operator, and Torch Telecom and Cable & Wireless Communications, which provide fixed-line services.

Centrica will work with Vodafone to provide and market a wireless phone service to its customers while Torch, a subsidiary of Kingston Communications, and CWC will provide fixed network capacity for the gas company's residential phone service.

In addition, all three operators will offer internet access for users, helping Centrica to establish a comprehensive telecoms unit by September this year. The company hopes to attract 1 million customers by the end of 2001.

Christian Maher, an analyst at Investec Henderson Crosthwaite, said: "This is a logical move for Centrica. They've already marketed financial services and this is the next step."

Another analyst commented: "This is the sort of deal you're going to see more of. There are lots of companies marketing different services which are beginning to extend their reach.... This is a good deal for Centrica because Vodafone in aligned to a strong corporate base."

As part of its strategy of diversifying into new sectors, Centrica recently launched the Goldfish credit card, offering holders insurers and credit services. The group, which was formed following a demerger from the British Gas in 1996, also acquired the AA breakdown service for £780m last year and now offers electricity alongside its core gas services. It has about 14 million customers in total.

Roy Gardner, Centrica's chief executive, said: "With 3 million electricity contracts signed and more than a million Goldfish card holders, we have an impressive track record in marketing new services to consumers."

Peter Bamford, the chief executive of Vodafone UK, said: "We are delighted to be working with Centrica. This is a powerful partnership, combining our expertise with Centrica's marketing skills and extensive customer base."

Centrica said in February that it would invest £75m in telephone services this year and will double that amount in 2002. It will spend a further £25m on e-commerce this year, including a joint venture independent savings account (ISA) scheme with Norwich Union, the insurer, and an internet-based share dealing service.

The group recently appointed Saul Lanyado, a former GEC Marconi and STC executive, to head up its new telecoms arm and has already begun recruiting managers and call-centre staff ahead of the unit's launch.

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