Allphones parent company sold to Canadian telco giant for $70 million in win for retail sector

Canadian telecommunications company Glentel has paid $70 million for Australian telco retail business AMT Group, which controls the 170-location strong Allphones franchise, in a rare good news story for the retail industry.

The sale comes nearly a year after rumours of the company’s initial sale were circulated, although those reports suggested the business would sell for up to $100 million with $17 million in earnings before interest and tax for the 2010-11 year.

The newly released figures confirm sales of $161 million and earnings before interest and tax of about $18.5 million.

Glentel was contacted this morning, but a reply was not available before publication.

Glentel said in a statement the purchase would result in the company controlling 83% of AMT, and particularly emphasised the Allphones brand.

“The company has a long history of providing customers with value, choice and expertise in a multi-carrier environment located primarily in shopping malls,” Glentel noted.

President and chief executive Tom Skidmore also said the company’s volume buying power through its All Distribution subsidiary provides “great deals for their customers”.

“We are particularly impressed with the management team, who have developed a number of unique ways of positioning their brand,” he said, noting the Allphones Arena in Sydney Olympic Park.

The executive team will control an equity stake and continue to work in their current roles.

Allphones began in 1989, with just one store in South Australia. It expanded into Western Australia in 2000 and then South Australia in 2001, and now includes 170 locations.

Apart from the Allphones franchise, it also controls Funky Samurai, MyNumber and Australian Retail Management Services.

The sale represents a solid win for the retail sector in a year of collapses. Given the huge amount of competition among telco carriers, it stands to reason retailers would be able to benefit from large amounts of customer movement.

But Allphones has not always had a steady ride through its history.

Its former chief executive, Matthew Donnellan, was found by the Federal Court in 2010 to have engaged in a prolonged campaign against a group of franchisees.

The company and executives were ordered to pay $3 million plus costs to 55 franchisees for unconscionable conduct.

Back in 2008, the Federal Court also found the company had breached some provisions of the Franchising Code.