Can Dunstone go to the wire?

Like any entrepreneur worth his salt, Carphone Warehouse’s Chris Dunstone has the ability to spring a surprise. He has certainly done so with last week’s £90m acquisition of Opal Telecom, a fast-growing provider of fixed-line telecoms services.

The surprise is multi-dimensional. Why should this apostle of mobile wireless technology so dramatically turn his attention to fixed-line technology, commonly regarded by his ilk as old hat? Then again, who in their right mind would choose, of all potential rivals, to take on the monopolistic might of BT, which reigns supreme in fixed line?

There are other, subtler issues raised by this acquisition as well. Opal is a business-to-business operation, yet Dunstone is known for his high street retail skills. Where exactly is the synergy? More tellingly, perhaps, Dunstone has made his name by being an even-handed intermediary between consumers and telecoms brands. Yet here, by implication, he is embarking on the provision of his own proprietary telecoms solutions, a situation which may nettle those who formerly regarded him as merely an ‘honest broker’.

On closer inspection, however, these paradoxes are not as irreconcilable as they seem. Taken in the round, the Opal acquisition looks like an acknowledgement that mobile technology, and therefore margins, have fallen away for the foreseeable future; whereas fixed line, overpriced though it is, will be around for much longer than originally anticipated.

Frankly, it’s not been difficult to read the runes. The mobile industry has abysmally botched its move into 3G, not only in terms of delivery, but in its very analysis of the new technology’s consumer benefits. The relatively recent deregulation of fixed-line telecoms plus BT’s habitual corporate greed may, by contrast, create a winning combination for any competent interloper looking to make some money.

Opal, though fairly small, is by all accounts a well-run company; Dunstone’s first task will be to graft onto it consumer marketing nous. This he is well equipped to do. Not only is he likely to undercut BT prices in the residential market, we may also expect him to offer a tempting package involving fixed-line discounts to every customer who walks into his shops and buys a mobile phone. It’s an added value proposition that BT will find hard to beat.

But wait a minute. Haven’t we seen this sort of thing before, and doesn’t big, bad BT usually end up seeing off the plucky little interloper? Whatever happened to Mercury, or for that matter the cable companies which – for a while but only a while – made headway against BT by offering cross-subsidised telecoms on top of the provision of television services?

We cannot be certain, of course, but there is reason to suppose Dunstone will be more successful. The key lies in personality, and the ability to pose as a consumer champion against the corporate bully. It’s a role which has been played consummately by Sir Richard Branson and more recently Stelios Haji-Ioannou against BA. Maybe Dunstone can deploy the self-same tactics against BT, and spring yet another surprise.

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