Ringing the changes at mobile phone distributor

Jun 11 2010 by Peter McCusker, The Journal

NORTH East entrepreneur Ian Gillespie has sold the majority of his phone distribution business to an acquisitive North West operator and has used some of the cash from the sale to launch a new venture.

Lancashire-based Daisy Group made its second North East acquisition in two months when it snapped up over two-thirds of Gillespie’s Cramlington-based Fone Logistics operation for £3.6m yesterday.

Gillespie and finance director Michael Fitzpatrick have set up a new operation called Activ Business Communications which is also based in Cramlington.

Gillespie, who launched the company in 1996 and built his business into a £100m a year operation, says Activ will retain Fone Logistics’ network 3 customers, which accounted for around a third of its turnover.

Mr Fitzpatrick, who owned the remaining 12.5% of Fone Logistics, said they had been approached by Daisy. “The mobile phone industry is changing rapidly with consolidation around the established networks driving changes,” he said.

“This is a good deal for us. We will be starting with a staff of four and recruiting up to 15 quickly. This allows us to continue to progress our relationship with the 3 network and develop the company as the mobile technology continues to develop.”

The Daisy Group, which is based in Lancashire, is one of the UK’s fastest-growing business communication companies, having made six acquisitions in the last year.

Matthew Riley, chief executive officer of Daisy, said: “We are delighted to be able to announce this acquisition, which increases our competitive position in the mobile section of the unified communications market.

“This acquisition is also consistent with the group’s stated ambition to further consolidate the fragmented communications market and enhances our product offering to the UK SME market. We will be continuing to pursue this strategy.” Fone Logistics supplies mobile handsets and airtime to more than 600 dealers, who predominantly sell to small-medium-sized businesses, receiving commission from the mobile networks for connecting customers.

It has commercial relationships with three of the major UK networks, O2, Vodafone and Orange. It also has trading relationships with a number of the leading manufacturers including Nokia and Sony Ericsson.

Fone Logistics, which had revenues of £19.6m in the six months ending April 30 this year, will be managed by Daisy Group business Anglia Telecom.

Dave McGinn, managing director of Anglia Telecom, said: “We are here for the next few weeks reviewing operations, but it is absolutely business as usual. We have targets to achieve and we have come in with no pre-conceived ideas.”

Daisy was not prepared to comment further on whether they would be creating additional jobs or cutting the 70-strong Fone Logistics workforce.

The Nelson-based firm, which bought Prudhoe-based BNS Telecoms for £10.5m in March, says there are no plans to merge it and the Cramlington operation as they operate in unrelated fields.

Hugh Welch, senior partner at Newcastle law firm Muckle, which advised Gillespie, said: “We pride ourselves on strong relationships with our clients and have been with the Fone Logistics business every step of the way – from its inception, to growth to its sale.”