Exertis exits airtime

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The distributor had gathered a base of 22,000 connections across Vodafone, O2 and EE

Exertis is to exit the B2B mobile airtime space after just three years, the company has confirmed.

Mobile News exclusively revealed in March the division of the business, which has amassed a base of 22,000 connections across O2, Vodafone and EE, was under review.

Speaking to Mobile News last week, UK and Ireland MD Gerry O’Keeffe and sales director Simon Woodman revealed sales negotiations are at an advanced stage with several airtime distributors to offload its base – one of which is understood to be Mainline for EE connections, although this has not been confirmed.

Sale of base imminent

“We are coming out of airtime and it will be completely finished within the next couple of months,” said Woodman, following the release of the firm’s 2015 financial results, which saw a record 5.49 million handsets and accessories sold.

“We will be transferring the connection base to another distributor to ensure continuity of the service for our partners,” he said.

Impact

The removal of the business will affect around 80 dealers, who were connecting on average 1,500 SIMs per month.The bulk of those were to EE, which O’Keeffe said played a key role in its decision.

He explained EE’s acquisition of rival Mainline at the end of 2014 all but ended its ambitions to become a “leading player” in the market – something it claims to have achieved in mobile, gaming and IT distribution.

Mainline has seen monthly connections double to around 5,000 since the buyout, aided by additional resources and around 30 EE direct partners now putting their business through it.

O’Keeffe said Exertis would need to be doing between 6,000 – 7,000 connections a month to achieve its ambitions, something he felt was unlikely.

“We have a firm objective within our business, we don’t want to be a bit player in the market, we want to be either number one or two,” O’Keeffe explained.

“It was a realisation with the acquisition of Mainline, there wasn’t space for us to get to that position. That was a critical driver in our decision. While EE was never going to move away from us in regards to the dealers that we had, it was a huge part of our airtime business and consequently the opportunity for growth was not what we had anticipated.”

Sacrifice

Woodman added the Government’s decision to review, with a view to potentially abolish Salary Sacrifice schemes – of which a sizeable part of its airtime proposal is made up with, was another major reason.

The scheme, introduced in 2012 by HMRC, allows employees to contribute a portion of their monthly wage to a benefit such as childcare vouchers or mobile phone contracts. Employees contribute less national insurance as a result.

“It’s very likely funding and support from HMRC will be pulled,” said Woodman. “It made sense to do a full review. If it’s going to be shut down [salary sacrifice], we may as well have taken positive action on realigning that side of the business.

All staff retained

The airtime business accounts for seven out the 68 staff in the mobile business in Basingstoke – all have been retained and redeployed to other departments with Exertis.

“There are no job losses,” said O’Keeffe. “We will do all we can to ensure there is minimal disruption to any of our dealer partners.”

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