Toople aiming to topple BT

Toople is a new brand in the corporate telecom sector. The company was founded earlier this year by CEO Andy Hollingworth who spent a dozen years at TalkTalk. He sees a major opportunity to grow in the SME market, especially those 5 million or more businesses with under 50 employees.

 Toople aiming to topple BT


Toople is a new brand in the corporate telecom sector. The company was founded earlier this year by CEO Andy Hollingworth who spent a dozen years at TalkTalk. He sees a major opportunity to grow in the SME market, especially those 5 million or more businesses with under 50 employees.

Toople (LON: TOOP) is a new brand in the corporate telecom sector. The company was founded earlier this year by CEO Andy Hollingworth who spent a dozen years at TalkTalk. He sees a major opportunity in the SME market, especially those 5 million or more businesses with under 50 employees. Around half of these are still taking their telecoms service from the expensive legacy supplier BT, which provides Toople with a big target market to aim at.

 

Toople can buy in wholesale broadband and telephony services, add on a 30 per cent gross margin and still significantly undercut the incumbent. The key enabler here is its proprietary Merlin software platform, which automatically connects a customer’s online order to the best provider and switches the services on. Low cost, price transparency, and an onshore help desk are the main selling points.

 

Success will depend on building up a big customer base without blowing all the funds raised in May’s IPO on marketing expenses. Acquiring subscribers cost effectively is vital. The recent trading update cited a range here of £40 to £91, being the commission paid to various price comparison websites when a customer clicks through and signs up. Toople has been busy getting accreditation on these sites and volume discounts will bring the average cost down as numbers build. The big prize is to get sufficient brand awareness over  time for a good proportion of sales to come from direct visitors to Toople’s website, where no commissions or advertising fees will be incurred.

 

200 customers per month have been signing up and the expectation is for that to increase ‘significantly’ next year. So far customer satisfaction scores have been high and there’s evidence that clients can be upsold more services once they are onboard.

 

Guidance is for break even in the second year of operation and profitability in year three. So far there are no forecasts in the market, with the company expecting to get some broker coverage in the New Year. It’s clearly very early days and the market cap is just £6 million, but this is a disruptive offering in a big market; so it’s worth flagging up for the watchlist.    

 

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