Telecom Plus

Telecom Plus is a Plc based in the United Kingdom. Its initial flagship product was the Smart Box, a free gadget that plugged into a phone socket and hunted out the best telephone call rates

Charles Wigoder, the CEO since 1998, believed that a low-cost route to market would prove to be a critical element in successfully promoting services to the residential market, and established a multi-level marketing system of agents across the United Kingdom. In just over 7 years, the business amassed over 200,000 domestic and small-business customers, 15,000 of whom were also Distributors, signing up new customers in return for a residual income and cheaper utilities themselves. Trading as the The Utility Warehouse, Telecom plus is a “virtual” retailer, with no shops and no advertising – just a Head Office with over 200 staff. Wigoder says: “The secret of our success has been our unique business model. We also have the ability to move quickly to take advantage of opportunities.”

Low costs allow Telecom Plus to offer competitive tariffs to their customers, which has driven sales growth by an average of more than 20% pa over the years to 2007. Since 2003, the Company has been highly profitable, although in November 2005, Telecom Plus warned that high energy prices had resulted in significant losses in its gas business. In February 2006, the Company entered into an agreement with npower under which they took responsibility for purchasing the energy used by UW customers although UW remain responsible for all customer-management activities, such as billing, customer service, metering, debt collection and administration. As part of the arrangements, npower have an option to acquire the 29.9% of the equity held by the Board during 2009.

On 6 June, 2006 the group said losses experienced in its gas business during the first two months of 2006 reached almost £8m, offsetting the profits of £5.5m achieved during the first half-year. As a result of the losses, the group posted an overall pre-tax loss for the year of £1.6m, compared with a £10.5m profit the previous year. Turnover rose 33% to £136.3m. For the latest year to 31 March 2007, Telecom Plus reported turnover was up to £175m, record pre-tax profits of £11.5m, and cash balances of over £25m with no debt .
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