Chess looks for more pawns after Avenir

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The acquisition Avenir’s UK airtime business makes perfect sense, but as Pádraig McGarrigle explains, Chess is already eyeing its next move

The acquisition of airtime distributor Avenir Telecom last month was no shock. The company had been touted for years – with even owner Jean Daniel Beurnier making it clear he’d had enough of the UK arm of the business.

The only surprise – rightly or wrongly – was its buyer. When Mobile News first picked up on the scent, all roads pointed towards Daisy Group (almost by default, given its spending power and recent history) and Carphone Warehouse Business (CPWB).

How close either of these got is still a mystery – but we suspect both had more than a passing glance.

With the recent fighting talk from CPWB – and its thoughts now turning to acquisitions, be it other distributors or indeed dealers, missing out on, or indeed rejecting, the opportunity to buy Avenir may eventually come back to haunt them.

Afterall, buying Avenir was, in the most basic terms, a great chance to get rid of a rival and shrink the indirect sales pool. Instead, with Chess’s arrival, the numbers have remained the same. And speaking to the firm’s managing director David Pollock – a man who has overseen more than 80 acquisitions with Chess in the past two decades – it was abundantly clear Chess isn’t about to stand still.

Best of both worlds

The opportunity, to borrow a quote from Pollock, is “enormous”. As he rightly acknowledged, fixed line revenues are being eroded by mobile. But as anyone reading this at home or work will appreciate, whilst your mobile is king, you’re unlikely to rid yourself of a landline any time soon.

Chess has the best of both worlds. Acquiring Avenir gave it a ready-made 60,000-plus connection base – it also has more than 50,000 loyal fixed line and IT customers.

Cross-selling opportunities are vast on both accounts. Afterall, the vast majority of those 50,000 customers (customers not connections) will have a business contract with someone.

It makes perfect sense to switch that account to a single monthly bill.

Traditional mobile dealers will also have increased options in achieving the holy grail of selling additional services, topping up their monthly commissions.

Based on this alone, Chess has a tremendous chance to cement its position in the market.

From an organic point of view it’s a great opportunity.

But the self-confessed acquisition machine is not stopping there. Pollock insists its eyes are already assessing its next move – surprisingly talking up plans to buy another mobile airtime distributor.

He of course refused to elaborate further but assessing the current market,  thanks in part to high levels of acquisitions, it’s hard to imagine where that might be. Daisy Distribution? Carphone Warehouse Business? Mdee (formerly Midland Distribution) perhaps? How far can Chess’s buying power stretch?

Not discussed

Daisy Group, parent company of Daisy Distribution, announced plans earlier this year to hit £500 million-worth of revenue by 2017 – and divesting itself of its rumoured 200,000 connection base to a rival is not something I imagine has been discussed at the monthly board meeting.

Carphone Warehouse Business, and its 120,000-strong base, would only become a potential target if the board of directors of (the soon-to-be) Dixons Carphone decided its B2B airtime business was seen as a distraction that it could do without.

Organic growth

The most likely of the three mentioned (arguably) would be EE airtime distributor Mdee – a modest-sized family business, with a loyal customer base and respected reputation in the industry.

They, too, have just rebranded and appointed former Avenir managing director Tanny Jeffrey to lead its teams.Not a sign of selling-up.

Chess may be better advised focusing on organic growth as a way of growing its mobile business rather than look at the scant acquisition opportunities available.

However, as this industry has shown us so many times, nothing can be ruled out.

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