The acquisition of Western Australian-based mobile phone retailer, Communique, by Queensland’s Fone Zone Group Ltd is expected to create the largest specialist mobile communications retailer in WA.
The acquisition of Western Australian-based mobile phone retailer, Communique, by Queensland’s Fone Zone Group Ltd is expected to create the largest specialist mobile communications retailer in WA.
The $6 million acquisition will strengthen Fone Zone’s market position, with the integration of 15 Communique stores taking Fone Zone’s total store network to 27 in WA and almost 150 nationally.
It places Fone Zone just ahead of Applecross-based Allphones, which recently became a true national player when it opened a Northern Territory branch to take its total outlets to 142.
The purchase price is more than triple Communique’s 2006 EBIT.
Communique director Mark Bradbury said he was planning to leave the business to explore other opportunities and was looking for a buyer when Fone Zone put in an offer.
“We were very happy with the deal; it was beneficial for both parties,” Mr Bradbury said.
He said the companies had a very similar service culture, particularly in terms of customer care, warranty policies and general good business practice.
This, along with Communique’s large share of the WA market and its position as the largest Telstra dealer in the state, made the company an attractive proposition for Fone Zone’s WA expansion.
Mr Bradbury said that, before the sale, Communique was looking to expand operations into the eastern states but found that the intense competition among mobile retailers a major hurdle.
“We either had to grow and move over east, or sell. We were looking for opportunities to move into other states but we found it was very hard to go it alone and start from scratch,” he said.
The merger leaves just three major WA-based mobile phone retailers in the market – national franchise Allphones, independent Optus premium dealer Living Digital, and B Digital.
Living Digital director Jason Tame said that, following the merger, Living Digital would be the last remaining independent WA-based mobile phone retailer.
The company has eight stores across Perth, including one in Mandurah, and is the biggest Optus premium dealer in the state.
Mr Tame said being WA owned and operated allowed the company greater flexibility, particularly with its marketing strategies.
“Our generous cooperative agreement with Optus gives us full independent control of all marketing. We can be very quick and reactive to the WA market,” he said.
Mr Tame said he had witnessed national campaigns that succeeded in the eastern states but flopped in WA due to different market conditions, citing the campaign of carrier 3G, which was launched nationally even though only several WA suburbs were covered by the technology.
In such a highly competitive market, Mr Tame said, the company’s main focus was on offering mobile handsets and accessories, such as bluetooth.
“People don’t care who [the carrier] is, they care about a headset that looks good and does the job,” he said.
Mr Tame believes the new merger won’t have a major impact on the WA mobile retail space, but may present a competitive challenge at Living Digital’s Mandurah and Warwick stores, both of which are located in close proximity to Communique/Fone Zone stores.
“Optus already offers very competitive packages compared to Telstra, so it’s not really a major concern for us,” Mr Tame said.
B Digital CEO Michael Simmons said the mobile phone industry was becoming increasingly competitive, with the modern consumer more interested in buying attractive handsets and utilising cap and pre-paid plans instead of the traditional post-pay contract.
“There is mobile saturation in Australia at the moment. Mobile phones are becoming more and more of a commodity,” Mr Simmons told WA Business News.
“Mobiles are a fashion accessory. Handsets are selling the plan, the plan is not selling itself,” he said.
B Digital acquired the B Shop business and assets in July this year after the business suffered losses in the previous financial year.
Mr Simmons said the company was looking to introduce products other than mobiles into its B Shop outlets over the next 12 months, including ADSL, dial-up internet, fixed-line bundles, mobile accessories and other electronic products in order to diversify revenue streams.