Shell throws hat into the ring for Post Office telecoms arm

Back in September, it was reported that the Post Office was exploring the sale of its telecoms arm, which currently boasts around 500,000 customers and generates revenues of around £150 million. The decision to auction the unit, as well as the company’s its insurance division, came as part of a review initiated by newly inaugurated CEO Nick Read, who joined the company last year. The auction was reportedly inspired by a number of unsolicited offers the company received; as a result, the company has said that it would not proceed with the sale unless a satisfactory price was obtained.

 

Now, just over a month later, three bidders appear poised to do battle for the telecoms unit. Two of the players should come as no surprise – broadband providers Sky and TalkTalk are naturally well positioned to switch the Post Office’s customers over to their networks. But the third entrant, Shell, is something of a surprise.

 

Oil and gas giant Shell has had a growing interest in the telecoms market in recent years, buying retail energy and broadband supplier First Utility in 2018. As a result, they currently provide broadband to around 130,000 UK customers alongside 870,000 domestic energy accounts. The purchase of the Post Office’s telecoms unit would not only expand their telecoms customer base significantly, but offer them some interesting cross-play opportunities with their utilities customers.

 

The potential acquisition comes at a time of serious restructuring for Shell, as the company pursues its goal of net-zero emissions amid the backdrop of a global pandemic. Since then, the global crisis has dealt Shell a harsh blow, with their shares more than halving, resulting in redoubled efforts to streamline the business. At the start of October, the company announced it would cut 9,000 jobs from its 83,000-strong workforce, saving the company an estimated $2.5 billion. 

 

The move also reiterates just how important convergence is becoming across key national infrastructure. Beyond energy and telecoms, Shell also acquired NewMotion, one of Europe’s largest electric vehicle charging networks with a strong presence in the UK. While this clearly ties in to the company’s goal of going green, it also demonstrates a clear understanding of the strategic importance of diversification as the world begins to shun fossil fuels. With energy, telecoms, and transportation networks, Shell could soon be making plays in the smart city space.