Npower sells customers to smaller rival

Marion Dakers
NPOWER yesterday claimed to have created a new household energy supplier that will compete with the big six, after selling 770,000 customer accounts to Telecom Plus.

In a £218m deal, Telecom Plus will almost double its customer base and immediately boost its energy margins by 4.25 per cent.

The FTSE 250-listed firm, which trades as Utility Warehouse, attracts new customers with word-of-mouth sales tactics through its 39,000 distributors. It also offers discounts for households that sign up to several energy, telecoms and broadband products.
Telecom Plus is taking on Npower’s customers by buying back Electricity Plus Supply and Gas Plus Supply, which it sold to Npower for a nominal sum in 2006. It will continue to use Npower as its wholesale supplier.

“In one move we have helped to create the biggest independent competitor in Britain’s household energy supply market. This is good for competition and good for consumer choice,” said Paul Massara, chief exec of RWE Npower. “Today’s announcement shows that Britain is well on the way to having a Big Seven rather than a Big Six.”

Energy firms have come under political fire after hiking winter fuel bills. Labour leader Ed Miliband has pledged to freeze bills for 20 months if he wins the next election. Power companies, meanwhile, have complained that green levies are responsible for much of the recent price rises.

Telecom Plus is raising £130m through a placing and open offer, run by Peel Hunt, to fund the purchase.

“This is a transformational deal for the company, delivering significant earnings enhancement... and the opportunity for us to provide even more competitive energy prices to our customers in future,” said Telecom Plus executive chairman Charles Wigoder.

Shares in Telecom Plus surged 19.8 per cent to a record closing high of 1,805p.