24/09/2021

Aerofone

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Fortunately, I had plenty keeping me occupied. Years back when I had lived in Bedford there had been a loose extended-family connection to a Vodafone service provider, run by a brother and sister, Jo and Roger Marks, loosely related to my daughter-in-law. Having met up with them, and given my brief Granadaphone history, Jo asked me to pop in on a Saturday and work with her on local advertising campaigns. The market was moving so quickly that every week the market, the pricing, the product line-up and the packages had all changed, so it was an intriguing and challenging task.

Now years on and out of the blue Jo phoned me and asked for a meeting – Somerset to Bedford was a long trek but she had made it sound interesting. She was doing a reverse takeover of a fixed-line communications company and wanted to talk about marketing the merged entity.

There was a sectoral move at the time for comms to coalesce in this way and the move was timely. The merged fixed-line operation, Stanhope, had a group of managers that were coming with the deal and Jo was the only senior person on her side of the new group; Roger was pursuing other aspects of their earlier business. She therefore asked me to join as her Deputy Group Managing Director and ‘watch her back’.

I arrived after some early investors had already been attracted by a prospectus that appeared to have been prepared by the Financial Director of the Stanhope team and they had attracted some big hitters. My first role was to take the prospectus numbers and turn this into an operational business plan for the various divisions.

Aerofone business card

Very early on I asked Jo what she thought the Stanhope’s Financial Director was, professionally. She thought he was an accountant, when he was actually a PR man, which didn’t augur well for the figures he had drawn up for the prospectus. He had shown group turnover approaching £100m, with projected profits for the first year at just £1.2m.

My first enquiries established that over £80m of that turnover was in phone top-up cards. But this he had recorded at their retail face value, that is the price at which our retailer customers sold them. I’m not an accountant either but knew enough to realise a correct statement of that turnover was to use our invoiced wholesale price. On this basis we were really a £12m turnover operation, making that £1.2m profit, which is pretty respectable for the time and in a period of merger and redesign. But the investors had been shown £100m!

One of the big hitters they had attracted was Nigel Wray, perhaps best-known today for his ownership of Saracens Rugby Club. I was called to an early meeting with him where he explained his purpose for the meeting was to decide whether he should sue us or just put it down to experience, that focused the mind!

There had been something of a collapse in communications companies on the markets which to a minor extent provided a useful smoke-screen. But I didn’t rely on this, I talked instead of the underlying strengths of the business and the massive potential for a merged fixed/mobile operator. Fortunately, Wray concluded that he would wait and see what we achieved.

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