April Round Up
Deals up, revenues up, tariffs up and down and Orangina is back in the fridge...
Items of interest that are on the periphery or weren’t quite meaty enough to write a single post about (yet) include:
Just making it into this month’s Round Up, Likewize announced the acquisition of Speedperform, the Copenhagen based support content firm focused on the mobile sector1. With an all-star global client list including carriers and MVNOs, this feels like a neat capability add on to their acquisition of LucidCX back in 2021. Financials were not disclosed and my Danish, even with google.translate, is not up to much. I think gross profit for 2024 was around €1.9m and net profit was around €50k. So, pick your tech multiple (10x - 20x net profit), give a bit here, take a bit there and the deal got done. I think this means that Likewize have swept up two of the three main support content providers now; Qelp was acquired by Sykes (now Foundever) way back in 2015.
TMTFirst, the Stoke-on-Trent based repair stalwart, filed FY2024 accounts this month. These guys are worthy of a deeper dive. Until then, it was good to see that revenues increased almost 20% from £18.4m in FY2023 to £22.1m. Gross profit increased to 14.5% which is just south of my current sector benchmark, as cost of sales growth slowed. The business turned an operating profit for the first time since 2021 and all the key balance sheet metrics improved a few points suggesting TMT’s mission to “keep technology alive for longer”, is headed in the right direction. Good stuff.
Foxway released their annual and sustainability reports. I reviewed the FY2024 financials a month or so ago here so I’ll not go over it again. However, their sustainability report2 is worth a look, but only if you have 117 pages worth of time though. I’ll admit to a certain bias given a couple of their views align with my own. First there’s a healthy approach to “avoided carbon” (see below). They frame avoided emissions as a communications tool rather than an offset. They’re transparent about limitations, explicitly stating the risk of double counting for example. All in all, it comes across as a far more nuanced approach to reporting the benefits of circularity without overstating the claims. They also agree with my sector consolidation narrative. Quite how they’re going to do that with the current bond restrictions remains to be seen, though it’s not impossible. Perhaps the new Chief Strategy Officer3 will have a few ideas.
No such acquisition constraints for Itochu. The Japanese conglomerate and shareholder in Asurion Japan K.K. acquired U.S. based wesellcellular4 the wholesale distributor, presumably to assist with the international expansion of their Belong franchise and aim to “build a global network for the utilization of used mobile devices and contribute to the development of a sustainable society”. I buy the first bit, see above and below for the caution around second bit.
Closer to home I was a surprised to see that Exertis acquired Group 8, the authorised Apple repairer5. I’ve previously suggested that MTR Group might do better outside of the Exertis umbrella6. That might still be the case with this acquisition adding capability and value to the Essex based repair and refurbisher and potentially taking the pressure off client/supply concentration. Alternatively, taking the press release at face value, Exertis intend to “lead in the second-life market”, and Group 8 might be the first in a series of capability acquisitions. If that’s the case, they’ve got the balance sheet and the cash to pick up a few of the smaller organisations. Certainly something to watch.
At the beginning of April, Assurant appeared to stick another £10m into Assurant Group Limited in the UK (one it’s main European based holding companies). However at the end of the month, there’s seems to be a follow up filing suggesting it’s only £5m. It’s possibly related to the iSmash capital injection that I reported on in the March Round Up. Better news for Assurant in home territory though. Both Comcast (xfinity) and Charter (Spectrum) reported significant net-adds in Q1, most likely eating into Verizon’s subscriber base7. Assurant were probably the first to take them seriously back in 2017 and 2018 respectively, partnering for device protection and tech support from the outset. The divergence between Assurant’s performance in the U.S. and other markets highlights the challenges of operating internationally and especially in the fragmented European market.
More scrutiny for U.S. based businesses operating in Europe and something I missed back in January. Following on from their 2021/2022 study into Mobile Ecosystems, the UK Competition and Markets Authority are launching a secondary study into Apple and Google directly8. The study, with a statutory deadline of 25th October 2025, aims to determine the extent of competition between Apple and Google’s mobile ecosystems, whether their respective ecosystems favour their own apps and services and any potential exploitative conduct. They appear to have limited redress “to open up access to key functionality needed by other apps to operate on mobile devices; or making it possible for users to download apps and pay for in-app content more easily outside of Apple’s and Google’s own app stores”. Fierce.
I covered my thoughts on Apple’s potential buffer to the tariff announcements here and I’ve no intention of running a commentary, it’s all too chaotic9. Apple’s supply diversification away from China towards India does however seem to be gathering pace. Whether that’s any protection from tariffs is at this point arbitrary, but the announcement that all US bound iPhones will be manufactured in India by the end of 2026 is a material acceleration of their supply strategy10.
At some point, I’ll be revisiting my article on avoided carbon credits11, learn a little bit more and share some (hopefully) relevant information on the latest thinking. When I published the article back in November, carbon credits for the two Alchemy Telco Solutions projects were not yet available. They are now, and the Riverse project ledger has been updated accordingly. Alchemy have two projects on the ledger, one for their site in Kildare site in Ireland issuing 5316 tCO2eq12 and another for their site in Stoke-on-Trent issuing 4368 tCO2eq13. One of my concerns back in November was the liquidity of these credits, and outside of the self-noms for going through the process, there’s seemingly little direct benefit. Status summary in the table below. Note there might a significant lag from when the project starts to when the credits are released and made available for sale.
I’ve made several references to the approach that two of the larger device protection companies take to claims fulfilment14. Assurant’s iSmash walk-in store offer and the “We come to you” man in the van approach from Likewize both set new benchmarks in terms of convenience. Whilst my scepticism of standalone profitability remains, as the new “cost-of-claim”, that scepticism is irrelevant. Consumers love the service with rumours of NPS scores creeping into unknown territory for insurance companies. With that in mind, it was good to read that more (Samsung) insurance customers in Germany will be able to grab a man-in-a-van as the Likewize service expands to 29 cities15.
Speaking of Samsung, after they announced that global Galaxy Trade-In programme with Likewize in January16, there’s been a subsequent announcement to tell us about an enhanced partnership with Foxway in Germany17. I’m not close enough to understand the nuances of the different programmes, so I’ll just follow my gut and assume it’s an OEM keeping a lid on supplier influence. Either that or Global excludes Germany.
Hopping across the border to Austria, great to read about the latest refurbed milestone from founder Kilian Kaminski18. Just over two years after they hit their first billion euros in GMV, the second billion was announced at the beginning of the month. This ties in with my estimated GMV for the European Marketplace Research Update I posted back in February19.
Finally, a sincere thank you to all my new subscribers over the last month. Please feel free to share the substack further and message me with feedback, or ideas for articles. If you are one a number of people subscribing from the same business, please consider a corporate subscription, if the UK weather stays like this, my consumption of Orangina is about to go through the roof.
Peace,
sb.
Also curious, regarding carbon credits earned by those various companies. Can these carbon credits be sold on an exchange or how does it work? It's first time I am seeing carbon credits being issued for refurbished phone businesses, its very interesting.
Thanks for the round-up and insights, seems consilidation will be a recurring theme.
Samsung's global trade-in program is interesting. They already run trade-in programs through partnerships with local trade-in operators but usually limited to when customer purchases a new device. So operationally it should not be difficult to pull off, they are just extending the trade-in program beyond being a promotion for new device sales.
I wonder if they will also extend the subsidies (overtrade) for trade-in value in the same way they do for sale of new devices. E.g. if customers buy an S25 you can get extra $100 in trade-in value (overtrade) for various models traded in. They can expense the overtrade subsidy under a sales campaign for a new product launch but it might be difficult to justify this expense if not tied to a new model sales campaign.
Its also interesting they have chosen one partner (Likewize) to run the program globally. In SEA they usually engage multiple trade-in partners depending on local market expertise, I heard they also implemented a "bidding process" for trade-ins among various trade-in partners. Not sure if that is linked to this global trade-in program.