One.Tel was the generic term used to describe a group of
AustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the continental mainland , the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans...
n based telecommunications companies, including principally the publicly listed One.Tel Limited (ACN 068 193 153) established in 1995 soon after deregulation of the Australian telecommunications industry, most of which are currently under external administration by court appointed
liquidatorsIn law, a liquidator is the officer appointed when a company goes into winding-up or liquidation who has responsibility for collecting in all of the assets of the company and settling all claims against the company before putting the company into dissolution....
.
The company was established by
Jodee RichJohn David "Jodee" Rich is an Australian businessman, who founded Imagineering Ltd, a microcomputer software and hardware distributor in Australia and South East Asia, in 1980....
and Brad Keeling and had high-profile backers such as the
MurdochKeith Rupert Murdoch, AC , usually known as Rupert Murdoch, is an Australian-born American global media mogul. He owns media outlets and is a major shareholder, chairman and managing director of News Corporation ....
and
PackerKerry Francis Bullmore Packer, AC , son of Sir Frank Packer, was an Australian media tycoon whose family company owned controlling interests in both the Nine television network and leading Australian publishing company Australian Consolidated Press Kerry Francis Bullmore Packer, AC (17 December...
families.
James PackerJames Douglas Packer is an Australian businessman.Packer is the son of the late billionaire media mogul Kerry Packer and grandson of Frank Packer. He inherited the family company, Consolidated Press Holdings Limited, which controls investments in Crown Limited, Consolidated Media Holdings and...
and
Lachlan MurdochLachlan Keith Murdoch is the eldest son of media mogul Rupert Murdoch and his former wife Anna Torv. He resigned from his executive positions at News Corporation on 29 July 2005. Lachlan is, however, still on the Board of Directors at NewsCorp and is a company consultant...
sat on the board of the company.
One.Tel attempted to create a youth-oriented image to sell their mobile phones and One.Net internet services. It became Australia's fourth largest telecommunications company before collapsing in 2001. Rich and Keeling continued to pay themselves multi-million dollar performance bonuses while the company crumbled around them. The Packer and Murdoch families lost around a billion dollars between them, a significant embarrassment given the presence of the younger generation on the company's board.
The company's slogan was
You'll tell your friends about One.Tel, to draw the connection between the brand and personal communication. The company also had a mascot known as "The Dude". The Dude was a cartoon-like depiction of a rather stupid man in his early twenties. His main role was to inform the public in television and print advertisements that even a stupid and lazy person such as himself could get a mobile telephone with One.Tel. The cartoonist responsible for drawing The Dude and many other of the company's graphic devices was also employed to paint large murals upon the garishly-painted walls of the company's offices all around the world. Internally, the company had a fondness for applying the
One.- prefix to everything relating to the business: One.Dude, One.Team, One.Sys etc.
A chronological outline of the One.Tel story
One.Tel began operations in May 1995. In 1999 One.Tel's Next Generation 3GSM 1800 network was launched by joint CEO's of the mobile business, Stephen Moore and David Wright in Sydney, Australia.
The original thought process began with a simple initiative: they wanted to start a new telephone company, one that the average person would understand. The company was very people focussed and focussed on the residential market, as opposed to corporate business. They wanted the consumer, or everyday person in the street, to have access to the entire suite of telephony products, which is why the company was marketed with the catch phrase “100% Telephone Company”.
At that time, the Company was firmly established in the telecommunications market, with operations in Australia, London, Paris, Amsterdam, Zurich, Frankfurt and Hong Kong.
One.Tel had three core product offerings: fixed wire long distance, Internet service provision and mobile telephony.
From 1998 through to 2000, One.Tel’s customer base more than tripled to 2.2 million and revenues doubled to $653 million. The business grew rapidly in Europe.
In December 1998 Project GSM was developed by
Jodee RichJohn David "Jodee" Rich is an Australian businessman, who founded Imagineering Ltd, a microcomputer software and hardware distributor in Australia and South East Asia, in 1980....
, Bradley Keeling, Kevin Beck, Stephen Moore and Alicia Crisp. This initial concept became the foundation for the One.Tel Next Gen 3GSM cellular network in Australia and spawned the international hybrid MVNO concept developed by One.Tel CTO Stephen Moore.
In February 1999, News Corporation (News) and Publishing and Broadcasting Limited (PBL) injected $709 million over three years.
In March 2000 One.Tel was successful in acquiring 15 MHz spectrum across all major capital cities. The One.Tel Next Generation Network was launched nationally six months ahead of schedule. It was the most technologically advanced network in Australia and offered differentiating features via a Smart SIM including ‘Voicemail with Reply Now’, ‘Megaphone’ and location based information on demand services – features that are now commonplace today.
At its peak, One.Tel’s strengths were recognised in consumer marketing and information systems, intuitive platforms and resources based on R&D in the Australian Next Generation Network, One.Tel continued to build quality, value for money telephony products and services while remaining a low cost producer for a time.
By May 2000 One.Tel had Operations in seven countries (Australia, UK, HK, Netherlands, France, Switzerland, Germany), over 1,900,000 active customers and was connecting over 250,000/month globally.
The pre-IPO years - 1995 to 1997
Jodee Rich and Brad Keeling decided to start a telephone company in August 1994. Jodee Rich developed a
business planA business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals....
for the company in September 1994. The ownership structure of the company in February 1995 was:
OptusSingTel Optus Pty Limited is the second largest telecommunications company in Australia, and is a wholly owned subsidiary of Singapore Telecommunications...
28.5%; FAI 18%; James Packer 5%; Kalara Investments 50% (approximately). Kalara Investments was owned by Jodee Rich and Brad Keeling. The total initial seed capital for One.Tel was approximately $5 million. One.Tel was officially launched by Rodney Adler on 1 May 1995.
The link with Australia's second largest telecommunications company, Optus, proved crucial to the company's early success. One.Tel initially operated largely as a reseller of Optus services, receiving $120 for each mobile telephone customer that it attracted. The Optus contract was a wonderful deal for One.Tel and a terrible deal for Optus. One.Tel did not even need to sign up a customer to a long-term contract, it merely needed to have a customer accept a SIM card in order to receive $120 from Optus. This reportedly led to some unusual business practices, such as paying customers $10 to accept a new SIM card. Many SIM cards were never used. It also had an adverse impact on the credit-worthiness of One.Tel's customers, as One.Tel signed up many people who would not have been accepted as customers by other telephone carriers. It has been reported that One.Tel's customers were mainly "single mothers, pensioners and teenagers". This aspect of the business has led some commentators to speculate that the business was initially conceived as a
pump and dump"Pump and dump" is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price....
operation - a business that had no long-term future, but was being built up for a quick sale via an
Initial Public OfferingAn initial public stock offering referred to simply as an "offering" or "flotation," is when a company issues common stock or shares to the public for the first time...
(IPO).
Between May 1995 and September 1996 One.Tel increased its customer base from zero to over 100,000. Optus decided to end its dealings with the company in September 1996, selling its shareholding back to the company for $4 million and paying compensation of $19.75 million for ending the $120 million deal early.
In its annual report for the year ended 30 June 1997, One.Tel reported revenue of $148 million and a before tax profit of $7.5 million. At that time the company had almost 300 staff.
From IPO to the onset of problems - 1997 to 2000
One.Tel floated on the
Australian Stock ExchangeThe Australian Securities Exchange is the primary stock exchange in Australia. The ASX began as separate state-based exchanges established as early as 1861...
at $2 per share in November 1997. Initial market capitalization was $208 million. On paper, FAI had turned a $950,000 investment into $51 million; Packer had turned $250,000 into $17 million and Rich and Keeling had a combined stake worth well over $100 million.
In addition, the company had paid out $4 million in dividends and $2.85 million in consulting fees to Rich, Keeling, FAI and Packer.
The original shareholders also received $16.9 million for the sale of two businesses, One.Net and One.Card to One.Tel in July 1998.
In the financial year ended 30 June 1998 One.Tel reported a before tax profit of $8.8 million. During the year the company had commenced a 'Global Strategy', opening offices in
Los AngelesLos Ángeles is the capital of the province of Biobío, in the municipality of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123.445 inhabitants...
,
London[]London is the capital of England and the United Kingdom. It has been a major settlement for two millennia, and the history of London goes back to its founding by the Romans, when it was named Londinium. London's core, the ancient City of London, the 'square mile', retains its medieval boundaries...
,
ParisParis is the capital of France and the country's most populous city. It is situated on the river Seine, in northern France, at the heart of the Île-de-France region...
,
FrankfurtFrankfurt am Main , commonly known simply as Frankfurt, is the largest city in the German state of Hesse and the fifth-largest city in Germany, with a 2008 population of 670,000. The urban area had an estimated population of 2.26 million in 2001...
,
Hong KongHong Kong , officially the Hong Kong Special Administrative Region, is a highly autonomous territory of the People's Republic of China, facing Guangdong to the north and the South China Sea to the east, west and south...
,
AmsterdamAmsterdam is the capital and largest city of the Netherlands, located in the province of North Holland in the west of the country...
and
ZurichZürich or Zurich is the largest city in Switzerland and the capital of the canton of Zürich. The city is Switzerland's main commercial and cultural centre and sometimes called the Cultural Capital of Switzerland, the political capital of Switzerland being Berne...
.
In September 1998 the company purchased mobile
spectrumA spectrum is a condition that is not limited to a specific set of values but can vary infinitely within a continuum. The word saw its first scientific use within the field of optics to describe the rainbow of colors in visible light when separated using a prism; it has since been applied by...
in each of the Australian capital cities at a cost of $9.5 million with a view to establishing its own mobile network. The company was unable to secure bank finance for the deal, and James Packer and David Lowy provided $5 million each to fund the purchase.
In December 1998 the Packer-controlled Consolidated Press Holdings purchased FAI's 16 million shares for $43 million. In February 1999 the Packer-controlled Publishing & Broadcasting Limited, in conjunction with
News LimitedNews Limited was the principal holding for the business interests of Rupert Murdoch until the formation of News Corporation in 1979. News Limited is now a subsidiary of that company.-History:...
agree to provide $710 million in return for a 40% stake in the company. The One.Tel share price hits a high of $13.55 in the days leading up to the announcement of the deal, prompting an insider-trading probe by the
Australian Securities and Investments CommissionThe Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...
. The News/PBL deal allowed the original shareholders to take more money from the company. Rich and Keeling received $62 million between them and James Packer received $20.5 million.
In the financial year ended 30 June 1999 One.Tel reported a before tax profit of $9.8 million.
The most remarkable day in the history of One.Tel was 23 November 1999.
Lucent TechnologiesLucent Technologies was a technology company composed of what was formerly AT&T Technologies, which included Western Electric and Bell Labs. It was spun off from AT&T on September 30, 1996....
announced that it would build and finance a European GSM mobile network for One.Tel at a cost of up to US$10 billion. The company's market capitalization reaches a high of A$5.3 billion on 26 November 1999, making it one of Australia's largest 30 companies.
The emergence of problems - the year 2000
In March 2000 One.Tel spent $523 million on purchasing additional Australian spectrum licenses. The Packer and Murdoch families provide another $280 million in funding. Australian investors provide $340 million in funding.
In the financial year ended 30 June 2000 One.Tel reported a loss of $291 million. The share price plummeted to below $1. The annual report includes details of the remuneration of Rich and Keeling, a matter that is to prove controversial after the collapse. Each received a $560,000 basic salary and a $6.9 million bonus.
In statements that would prove ironic, in September James Packer tells Sydney Morning Herald journalists that Rich is a visionary, that Brad and Jodee are excellent managers and that the share price will recover.
The end - 2001
In January 2001, Jodee met with
Kerry PackerKerry Francis Bullmore Packer, AC , son of Sir Frank Packer, was an Australian media tycoon whose family company owned controlling interests in both the Nine television network and leading Australian publishing company Australian Consolidated Press Kerry Francis Bullmore Packer, AC (17 December...
who told him, "You ran out of money with Imagineering, and you're going to do it again". A Macquarie Bank report states that the company was worth $3.5 billion, and the share price doubled within days.
Merrill LynchMerrill Lynch & Co., Inc. was a global financial services firm acquired by Bank of America in 2009, today known as Bank of America Merrill Lynch. The firm was acquired by Bank of America under distressed circumstances during the 2008 Financial Crisis. This article describes both the historical...
predicted that the company would run out of money by April.
In February, director
Rodney AdlerRodney Stephens Adler is an Australian businessman and former director of telecommunications company One.Tel and insurance company HIH, both of which collapsed in 2001. He was jailed in 2005 for his conduct related to the collapse of HIH.- Early life :Adler is the son of Hungarian Jewish...
sold 5 million shares for $2.5 million.
During April and May the company's problems became increasingly apparent. In a final attempt to give the company a chance to survive, News Limited and PBL agreed to subscribe to a rights issue at 5 cents per share to supply another $132 million in much needed cash. News Limited and PBL reneged upon the agreement later in May when further evidence of One.Tel's financial problems emerged.
The directors appointed
Ferrier HodgsonFerrier Hodgson is a group of Accounting firms specialising in Insolvency in the Australian and Asia Pacific region, with offices in all major capital cities in Australia, Hong Kong, Singapore, Malaysia, Indonesia, and Japan...
as administrator on 29 May 2001. The administrator's report states that the company was insolvent by March 2001. The administrator terminated approximately 3000 employees of the company on 8 June 2001.
Current developments - ongoing litigation
On 14 October 2005 the Sydney Morning Herald reported that the personal diaries of James Packer would be made available to ASIC to assist in its case against Jodee Rich. The
Supreme Court of New South WalesThe Supreme Court of New South Wales is the highest state court of the Australian State of New South Wales...
ruled that the diaries should be made available to ASIC but warned that the material should not be used "in a manner that simply raises prurient or titillatory interest that is not directly relevant to the case". ASIC is reportedly seeking compensation of $92 million from Jodee Rich and the former One.Tel finance director, Mark Silbermann on the basis that they did not exercise their powers with respect to the company with due care and diligence.
One.Tel Abroad
CentricaCentrica plc is a large multinational utility company, based in the United Kingdom but also with interests in North America and Europe. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.-History:...
acquired the UK business of One.Tel in 2001 and ran it successfully for some years. On 15 October 2005, Centrica stated that it wished to sell the UK One.Tel to concentrate on its oil and gas businesses. Ironically, a mooted purchaser was News Corporation. However, on 19 December 2005
The Carphone WarehouseThe Carphone Warehouse Group PLC , known as The Carphone Warehouse, is Europe's largest independent mobile phone retailer, with over 1,700 stores across Europe. They are based in the United Kingdom...
announced it was buying the company to merge its customers with its TalkTalk telecommunications offering. The One.Tel UK business was retained as a separate operating company, and not merged into the main TalkTalk business.
In late 2007 the One.Tel name was abolished and merged with TalkTalk.
Scarlet acquired the Dutch business of One.Tel by a merger also in 2001.
External links
ASIC media releases
- http://www.asic.gov.au/asic/asic_pub.nsf/byheadline/One-Tel+file?openDocument File of ASIC media releases on One.Tel
Other One.Tel Websites
- http://www.onetel.com One.Tel UK Site
- http://www.topup2talk.com Operated by OneTel's Just Dial
Media coverage