Post Office offloads broadband business

The UK Post Office has sold its broadband business to Shell Energy Retail for an undisclosed sum.

The move will enable the Post Office to concentrate on its core business, which is now more about providing banking services, travel money and bill payments than it is the actual post, while Shell Energy increases its presence in the retail broadband market.

The firms said they expect the deal to close in the next couple of months… and they seem confident of it going ahead smoothly. The Post Office said it will start migrating its half a million customers to Shell Energy in mid-March. For its part, Shell Energy said it is looking forward to welcoming the Post Office’s 450,000 broadband customers.

Whatever the actual number of customers, it’s fair to say that this is a pretty small broadband provider. Nonetheless, it seems popular, relatively speaking, with its customers. According to Ofcom’s latest telecoms and pay-TV complaints data, published on Tuesday, the Post Office scores above average, with 13 home broadband complaints per 100,000 customers in the July-September period last year, compared with an industry average of 15. Only Sky and EE fared better.

Shell Energy did not appear on the table, presumably because its market share falls below the 1.5% threshold for inclusion.

Shell Energy, which does not disclose its customer numbers, has been a broadband retailer in the UK for only a short time, having acquired First Utility in 2018 and rebranded to its current moniker the following year. That deal gave Shell an inroad into the UK retail energy market; it provides electricity, gas, smart home technology and broadband services. By scaling up that broadband business it is effectively highlighting the fact that Internet connectivity is now essentially a utility.

In a blog post on its Website, the company explained its reasoning behind the Post Office broadband buy:

“Reducing emissions to net-zero will need smart energy systems and smarter homes. New technology like smart thermostats and, in future, home batteries will depend on a reliable internet connection,” it said. “Broadband has grown into a service as essential as home energy. That’s why we’re pleased to be able serve more customers with renewable electricity, gas and fast, reliable broadband.”

Very carefully chosen words there, but the message is pretty clear.

The company is doubtless keen to create some stickiness among its customer base, offering energy customers discounts on their broadband services and so on. The company has made all the right noises to reassure Post Office broadband customers that nothing will change and their service will be automatically migrated. It will be interesting to see whether it manages to retain those 450,000 or so customers.

For its part, the Post Office said it has ceased selling its Internet products with immediate effect and has offered financial compensation to postmasters – the heads of Post Office branches – who had to date received incentives for selling broadband services. This will amount to “a significant one-off payment,” the company’s Director of Telecoms, Meredith Sharples said, without being more specific.

The upshot: you will no longer be hassled to buy an Internet service when you need to send a parcel (did that ever happen?), but you might be asked “do you want broadband with that?” if you have to talk to your electricity provider.