An Post may acquire UK mobile phone credit firm

An Post is in advanced negotiations to buy a British maker of machines which recharge pre-paid mobile phones with credit, it is understood.

The State-owned postal company, which is seeking to cut its staff by 1,140, is believed to be preparing to pay €6.49-€8.11 million (£5.11-£6.38 million) for e.Commercell. Discussions with e.Commercell's owner, Caudwell Group, are expected to conclude soon.

Both An Post's spokesman and Caudwell's spokesman declined to comment.

E.Commercell has up to 10,000 terminals at retail outlets in Britain and Spain and it signed a deal last year with Eircell Vodafone.

It competes in the terminals business with companies such as Alphyra - the former ITG - and Eason.

An Post recharges pre-paid phones on the Eircell Vodafone, Esat Digifone and Meteor networks at its automated post offices throughout the State. Such post offices are advanced technically and it is thought that An Post is keen to grow this element of the business.

The company is expected to enter discussions soon on an early retirement and severance package for staff. However, the Communications Workers' Union has claimed it was "extremely surprised" at the cost-saving initiative although that stance appeared to contrast with a welcome given earlier to the plan.

The company last week projected the "certainty" of a €37 million deficit this year after a €7 million loss in 2001.

It has cash reserves of €200 million but warned last week that these would be "almost exhausted" by 2004 if there were not radical cuts.

The company has used reserves in the past to purchase a courier operation in Dublin and develop its SDS parcels business.

In a memo last week to An Post's 14,000 staff, chief executive Mr John Hynes said 90 per cent of the reserves would be spent on "modernisation and development of our business". Firms "which support our core business" would be acquired, he said.

Caudwell Group is controlled by Mr John Caudwell, who is understood to own about 96 per cent of the group's stock. Based in Stoke-on-Trent, the group has annual revenues of €2.43 billion.

The e.Commercell business is thought to be small. The bulk of Caudwell's profits come from sourcing, distributing and selling phone units.

The group is also a mobile virtual network operator, which means it leases airtime at wholesale rates and sells it on to individual customers.