Parts of the dealer market last week questioned Daisy Communications’ purchase of airtime distributor Fone Logistics for a cash consideration of £3.6 million.
Rivals welcomed the move on the grounds disaffected dealers might search for new distributors as a result, and took a swipe by suggesting Daisy Communications’ whole master plan to sell unified communications might be flawed.
Fone Logistics, O2’s biggest distribution partner, will be managed by Anglia Telecom Centres going forward, with its chief shareholders Ian Gillespie and Michael Fitzpatrick quitting to run their Activ B2B dealership.
The unaudited management accounts of Fone Logistics for the six months ended April 30, 2010 show revenue, gross profit and EBITDA of £19.6 million, £2.1 million and £0.5 milion respectively.
Daisy Communications said it has identified certain areas of the business which are to be discontinued or hived out at completion – to the effect it could work off the same EBITDA with £11.8 million revenue and £1.4 million gross profits.
One rival distributor chief reacted: “It is one less competitor, so it’s consolidatory. I don’t consider it to represent an attack. I don’t feel threatened particularly by this.
“Unless Daisy can really add some more value than I can presently see in it, then I think that in the short-term we can only win from this as the two firms integrate their businesses.
“Until now we have fought against both Anglia and Fone Logistics. Does one plus one equal two in this scenario? I think it more likely adds up to something less than that. I would expect rival firms to pick up some uncertain dealers around the fringes as a result of this.”
Another said: “I am not at all convinced mobile dealers are buying into the unified communications piece as much as Anglia Telecom and Fone Logistics are convinced. The world is heading towards mobile, toward this market; it is not the case it is heading to some idea of convergence. The fixed line and IT resellers are coming to us.”
Another distributor source remarked: “Daisy has a bigger slice of the distribution market now. Fone Logistics had already absorbed Dextra. You now have three old businesses effectively under one roof. But we’re not worried by this deal. The dealers we work with are loyal to us and revenue share means they don’t move around as much.
“I’m sure Dave McGinn will say he can give a good level of service to a lot of dealers but the bigger you get, the harder it is.”
There were questions, also, last week about the likely systems and infrastructure the combined business would deploy; whether Fone Logistics’ weekly payment systems would be retained, for instance, or replaced by Anglia Telecom’s fortnightly reconciliation systems.
But Anglia Telecom Centres managing director Dave McGinn (pictured right) sought to calm fears of a sudden overhaul of systems, practices or staff.
McGinn said: “Both Anglia Telecom and Fone Logistics dealers will get paid in exactly the same way that they have always been paid,” he said. “Each company will continue to run its own system.”
He said of dealer concerns over account manager numbers: “Fone Logistics might have an account manager that looks after an area in which an Anglia account manager also operates. If both are delivering the right amount of business for that area, then does it really matter that we’ve got two people there? Not at all.
“We just want to ensure we can support our partners in the best possible way. If that means having more than one account manager to provide them with a service, then so be it.
“It’s absolutely fair to say that we’ve bought a business that has strong relationships with the account managers out on the road and we’re not looking to jeopardise that. We don’t want to go in, get rid of everyone and be left wondering what business we’ve bought. We’re definitely not looking to downsize from Fone Logistics’ base.”
But Daisy Communications chief executive Matthew Riley (pictured left) said: “We are working towards synergies that will see all of the business working on one platform.”
With regards the continuation of the Fone Logistics brand, McGinn said that was still unknown. “[Branding] is a great question, as I don’t think it is something that Daisy, Anglia or Fone Logistics have been able to answer yet. We need to look at where there are strengths in the market.”