Fone Logistics said last week its acquisition of Dextra’s airtime division will see revenues jump 20 per cent to £100 million.
The deal, completed last Wednesday, is part of a two-year growth plan that aims to put Fone Logistics at the forefront of UK airtime distribution.
It employs 104 staff, but will absorb five members of Dextra’s field-based sales team. Consultations with other staff have begun, but it is not expected all will move from Dextra’s Crewe base to Newcastle.
The official changeover date is scheduled for July 1, and Dextra said it would oversee a “seamless transition” for its dealers.
Rather than an upfront buyout, the deal will be conducted through an “earn out” process based on revenue generated by the Dextra business. Both companies said the structure of the deal was designed to ensure commitment to the venture.
Fone Logistics head of marketing Julien Parven said the deal would pave the way for similar agreements with non-mobile providers and give it the scale to push converged offerings.
The combined airtime businesses could also give it better footing to renegotiate with vodafone. Said Parven: “It’s no secret we’re operating in a consolidating market. In the past 18 months the indirect channel has dropped from generating 160,000 connections to less than 40,000, largely due to networks changing their stance on indirect consumer connections and distributors changing towards a B2B model.
“Bringing these businesses together will be more sustainable for the mid term in the indirect channel. The key difference between the two businesses is scale – airtime has long been Fone Logistics’ core business.
“This puts us in a strong position. On pure volume of connections this probably takes us to number one, but that isn’t necessarily our aim – it’s helping dealers understand the value in their embedded customer bases and extend that with new products and services.”
Dextra associate finance director Steve Marsh said it made sense for the 20:20 Mobile business to focus on its 20:20 handset unit and Dextra accessories division.
Said Marsh: “The Dextra airtime brand has always been a bolt-on and was slightly confusing, where the Fone Logistics brand is synonymous with airtime. Our number of connections was greatly reduced this year, so this is a sensible step.”