2/25/2008 10:32:00 AM
Dial-A-Phone bosses hold on to £60m ongoing revenue
Dial-A-Phone’s owners have hung on to lucrative ongoing revenue from operators and insurance from existing customers worth a combined £60m as part of the sale to Phones 4u, it emerged this week.
It is believed the joint owners Richard Frank and Jonathan Beck (who control 51% of the business), together with 49% shareholder, Barclays private equity, will continue to receive insurance revenue from the 300,000 customers currently on its books, according to sources close to the deal.
The insurance business is estimated to be worth £35m. The company will also receive the ongoing revenue operators such as O2 for the existing customers it signed up – worth an estimated £25m.
The sellers are also believed to keep around £15m of cash that is in business, and the £9m sale price from Phones 4u.
The owners will continue to receive income until such time as the customers end their insurance schemes or their contracts with their respective operators.
The fruits of the recurring revenues kicked in last year as the customers it signed up after the ongoing revenue deals with the likes of O2 started to bear fruit.
Companies house figures posted in the middle of last year show Dial-A-Phone’s sales fell from £160m in 2006 to £90m last year, while, curiously, pre-tax profits jumped to £19m from just £250,000 over the same period.
Phones 4u meanwhile has taken control of the Dial-A-Phone brand, property assets and highly prized software and systems. It has also bought the Dial-A-Phone’s white label affiliates operation, Direct Solutions Limited (DSL), which provides the deals, credit checking and delivery for the likes of 3, Comet and Argos.