Monday 20 May 2019

Openet weighs deal for Dixons Carphone's Irish ID Mobile unit

Niall Norton, chief executive of software firm Openet
Niall Norton, chief executive of software firm Openet
Gavin McLoughlin

Gavin McLoughlin

Irish telecoms software business Openet has expressed an interest in buying the Irish arm of ID Mobile, a mobile phone network owned by Dixons Carphone.

The network was put up for sale this summer and also attracted interest from Virgin Media and Sky, though the Sunday Independent understands those companies are no longer interested in a purchase.

London-listed Dixons Carphone put the business up for sale in June. A so-called mobile virtual network operator (MVNO), it uses Three's network to offer services to mobile users.

ID only started operating here in 2015, after the EU ruled that for competition reasons Three had to facilitate two new 'virtual' operators to get permission to buy O2 Ireland.

Explaining the decision to sell the business, Dixons Carphone said it wasn't willing to take on the costs of increasing ID's footprint on the Three network.

"The ID mobile operations in the Republic of Ireland represent a different business model to the UK, as it is a capacity MVNO with options for expanding its spectrum," it said.

"This brings with it excellent control, but that comes with upfront costs and increased administration, and we believe the business will flourish faster under dedicated ownership."

Openet provides software to telecoms operators and cable network operators designed to enable them to manage and monetise their business.

A deal to buy ID would see the business operating a network itself.

The company, run by chief executive Niall Norton, previously mulled an IPO but the plan did not proceed. Backers include Cross Atlantic Capital Partners and SAIC Venture Capital Corporation.

In February of this year, Germany-based Cipio Partners bought a stake in the business from Balderton Capital.

In 2016, operating profit grew 1pc to almost €7m despite revenue falling 4.3pc to €98.4m.

"Gross margin declined ... from 62pc to 60pc but this was more than offset by savings in operating expenditure," the company said in accounts filed at the Companies Registration Office. Customers of the business include Orange and John Malone's telecoms conglomerate Liberty Global - the parent company of increasingly high profile Virgin Media.

Dixons Carphone's decision to put the unit on the market comes as it seeks to revamp its mobile business. A profit warning in August spooked investors.

"We recognise that the performance of the mobile division needs addressing, and are taking action to adapt our model in order to cement our place in a changing world," said chief executive Seb James.

Chief financial officer Humphrey Singer said the company needs to evaluate the model of having customers pay for their phones over two years.

Openet and Virgin Media declined to comment when contacted by this newspaper.

Sky said the company "does not comment on rumours or speculation".

Sunday Independent

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