Cutting Room: Making sense of 20:20 Ireland

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20:20 Mobile’s shared ownership with Vodafone Ireland of 20:20 Mobile Ireland looked like a licence to print money. Why then was it so eager to sell?

The rumour last week was 20:20 Mobile Group has sold its 51 per cent in its 20:20 Ireland joint venture with Vodafone to free up cash. It seemed strange.

20:20 Ireland has consistently appeared like an ace in the hole for the 20:20 Group, especially as its UK business has been forced through a transformation under private equity ownership and a
squeezed UK landscape.

Of course, Ireland has also got 20:20 in trouble with Nokia in the past, but it was considered by the market almost a way for it to print money.

A joint venture with Vodafone? No two-year tenders, no battering on margins? Guaranteed supply? Forever?

But, then the story changed. Like January transfer deadline day in English Premier League football.

Vodafone Ireland claimed last week it had also sold its 49 per cent stake in the business. Vodafone had jumped first it seemed, as the print magazine went to press.

And so we assumed Vodafone Ireland’s move was symptomatic of a broader Group instruction to take distribution in house and centralise it – after all, that was the sense of Vodafone’s removal of Data Select in the UK for web fulfilment; something Vodafone is understood to be in the long process of winding down still.

And then, today (January 31), Vodafone backtracked. It has in fact retained its stake in 20:20 Mobile Ireland. And so questions change.

Why on earth has 20:20 Mobile sold its Irish business?

The Irish market is very different to the UK. Distributors have power in Ireland. They handle all supply into high street and independent retail.

But as the demise of Sigma last year showed, firms require that essential operator contract. Sigma’s O2 deal went straight to Radius, which looks to be holding all the cards.

Likewise BPI, itself taken from Brightpoint in a management buyout by Fergus Sweeney and Barry Napier some years ago, lost O2 business to Radius. And it has the Meteor deal.

20:20 Mobile Ireland had the only other one, and it is the one to have – Vodafone.

Sources close to 20:20 suggest the Irish business handled perhaps 300,000 units per year – of the 10 million it claims to ship globally. Perhaps then, its Irish business wasn’t essential to it.

But when the business is a joint venture with its primary customer, when it has it effectively over a barrel, then it has clear incremental value.

The initial view of 20:20 Mobile’s exit from the business was it must be drawing back on its international expansion. That opinion holds if Vodafone Ireland has retained its stake.

And it looks now like a remarkably shrewd purchsae by deBurca and Maher.

20:20 and Vodafone sell 20:20 Ireland

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