Shell reportedly pulls ahead of Sky and TalkTalk in Post Office broadband deal
In September the UK Post Office announced it was looking to sell its telecoms arm, ultimately decided to auction the telecoms unit alongside its insurance unit. By October, the bidders had been thinned to just three: the usual suspects in the form of TalkTalk and Sky, and a surprise player, oil and gas giant Shell.
Now, Sky News is reporting that Shell has in fact pulled ahead of the telecoms duo and is now in exclusive talks to acquire the Post Office’s broadband division.
The Post Office currently offers broadband to around 500,000 people, which would be added to Shell’s own 130,000 UK broadband customers, which it acquired through the buy-out of First Utility back in 2018.
The acquisition deal will take weeks to finalise but will likely cost Shell less than £100 million.
The match up between energy and telecoms is an interesting one. One the one hand, with connectivity being seen more and more as a utility, especially in the wake of the coronavirus pandemic, then it makes sense that it could be bundled together effectively with energy. On the other hand, energy prices fluctuate far more rapidly than telecoms, making pricing for converged packages difficult.
Nonetheless, the scale of the opportunity is significant. Shell has around 870,000 domestic energy accounts it could potentially partner with broadband deals.
Shell itself is having a troubling financial year, with the coronavirus pandemic hitting oil and gas demand hard. Couple this with the increasing pressure to go green – Shell itself has goals to become a net-zero energy company by 2050 at the latest – and it makes sense that the giant is seeking to broaden its horizons by expanding into new markets.
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