SPARK Energy has made its first acquisition since last August’s management buyout, with Sussex-based broadband firm Home Telecom being described as “a perfect fit”.
The acquisition allows Spark, which operates principally as an energy supplier to the UK lettings sector, to offer broadband, fixed-line telephony and entertainment packages.
Spark chief executive, Chris Gauld, said the creation of “the only genuine multi-utility company for tenant customers” was part of the company’s strategy to double in size over the next two years.
“This is the next stage of the journey,” he said. “The energy company continues to grow and improve… and we want to build out from that with more products and services and if we can acquire something then great, that gives us a head start.”
The acquisition builds on Spark’s core gas and electricity products, which are aimed exclusively at property managers, social housing associations, and their tenants. In addition to its current plans, Spark will now be able to offer all its customers and agents broadband and Sky television packages.
Contracts will last for as little as six months, with no exit penalties. Mr Gauld said a major complaint from telecoms customers was that deals tied them to a supplier for up to two years, with exit penalties for those moving house, for example.
The value of the deal was undisclosed but will increase Selkirk-based Spark’s customer base to 350,000 from 320,000, with a certain level of crossover.
“When you buy into something like Home Telecom and can offer multi-utility there is an immediate injection of customers, and there is the benefit that your customers become more sticky and loyal because you’ve got more products and services,” said Mr Gauld.
“There is also the benefit of attracting more customers because they’re coming in for entertainment and broadband, but also take the utilities,” he added.
Spark has been looking at ways to accelerate customer numbers since it passed the 250,000 mark and triggered obligations to invest in renewable technology and contribute to winter fuel payments.
“When we launched Spark what we identified was that energy and gas suppliers didn’t cater to the needs of tenants and their letting agents so we built the energy company from the ground up around that niche”, said Mr Gauld. “Broadband, telephony and entertainment packages are the obvious first step in any multi-utility offer, particularly in the rented market.”
The enlarged company will take on 25 staff from Home Telecom, with Mr Gauld confirming there would be no job losses.
Spark will continue to work with Global 4 Communications, a provider of telecoms solutions to the non-domestic market, which has been providing customer service and technical support to Home Telecom.
Its chief executive Nigel Barnett was a previous shareholder of Home Telecom He said: “I’ve worked with Chris and his team for the last five years, and seeing first-hand how Spark has grown into a major player in the energy industry means this acquisition was the right decision for us.”
Spark Energy was founded in 2007 by Canadian entrepreneur PJ Darling. Mr Gauld has been with the business since its inception and in August 2016, along with chief financial officer Hamish Osborn, completed a management buyout with the backing of four institutional investors, including a major UK pension fund, a European family and a Middle Eastern investment bank.
For the year to June 30 the company posted revenue of £126m with pre-tax profit of £4.1m.
Mr Gauld said the company would continue to look at acquisition targets, while also building organically and partnering where appropriate.
“The given is that Spark Energy grows and constantly improves and evolves,” he said. “Then strategically you’ve got two options, you get more and different customers for the energy product, or you get different products and services for your niche customer group.
“What differentiates us is our focus on a niche market that is underserved,” he added.
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