Telecom Plus: Rise of an MLM During Britain’s Energy Crisis


Telecom Plus is a UK-based public limited company that offers bundled utilities (energy, broadband, mobile, and insurance) through its subsidiary, Utility Warehouse (UW).

Since it offers discounted prices for the bundled services, it has recently seen a rise in customer numbers as cash-strapped households seek to cut costs during the recent spike in Britain’s energy prices.

That’s further complemented by the Refer-A-Friend scheme and UW Partners program, which allows customers to earn money by referring friends and becoming licensed distributors under a multilevel marketing program.

Here’s an in-depth evaluation of the company to help you understand its unique selling proposition.

Insights

  • Telecom Plus is a UK-based company that offers bundled utilities through its subsidiary, Utility Warehouse (UW).
  • The company uses direct selling through independent sales representatives called UW Partners.
  • The amount of money UW Partners earn varies, but high earnings are not easily achieved.

Section 1 – The Company

Telecom Plus Logo

This section provides a comprehensive overview of Telecom Plus as a company, including its past, present, and market performance through a review of verified data.

What is Telecom Plus?

Telecom Plus PLC is a UK-based public limited company listed on the London Stock Exchange and a constituent of the FTSE 250 Index.

It operates under the trading name Utility Warehouse Limited (UW), a fully-owned subsidiary of Telecom Plus.

UW serves as a discount club offering bundled utilities, including energy, broadband, mobile, and insurance. And UW has a direct selling model utilizing multilevel marketing.

Market and performance of Telecom Plus

Telecom Plus/ Utility Warehouse has emerged as one of the winners in Britain’s recent energy crisis as more households are drawn to its discounts to cut costs on rising energy bills.

UW offers customers discounts if they purchase electricity and gas with other services such as mobile, broadband, and insurance.

UW is expected to see a 20% rise in customer numbers in 2023 from the 729,000 recorded in March 2022. Plus an anticipated increase in adjusted profits to £75m ($91.6m) in 2023.

The company was also ranked 15th on the 2022 DSN Global 100 list of top revenue-generating direct-selling companies worldwide. Its revenue is £967.4m ($1.13B).

UW currently has almost 1,600 employees.

Related post: What is Ambit Energy?

History

Telecom Plus was founded in 1996, operating from a pub in Henley-on-Thames.

The company launched its flagship product, the Smart Box, in 1997. It routed calls to networks at cheaper rates than British Telecom.

In 2002, Utility Warehouse was founded to cover energy, broadband, and telephony services.

Telecom Plus’ shares were later listed on the London Stock Exchange in 2005 and included in the FTSE 250 Index, making it a British success story.

Who is the CEO of Telecom Plus/ UW?

The Telecom Plus and Utility Warehouse Co-CEOs are Andrew Lindsay (joined in 2007 and appointed to the Board in 2008) and Stuart Burnett (joined in 2016 and previously made COO in 2019).

The Executive Chairman of UW is The Hon. Charles Wigoder (joined in 1998).

Who is the owner of Telecom Plus?

Telecom Plus, which fully owns UW, is a publicly traded company; hence, various shareholders own its shares.

The largest shareholder is abrdn plc with 12% of shares. Charles Wigoder, the company’s Executive Chairman, is the second largest shareholder owning 9.4%. Next is Schroder Investment Management Limited, which holds about 5.4%.

Many other shareholders own smaller amounts of the company’s stock.

Where is Telecom Plus/ UW’s headquarters?

Telecom Plus PLC has the same headquarters as Utility Warehouse Limited, located at the registered head office: Network Hq 508 Edgware Road, The Hyde, London, England, NW9 5AB.

UW’s corporate social responsibility

UW has a corporate social responsibility program through the UW Foundation.

In turn, Charities Trust administers the foundation which supports positive change for the environment and local communities.

UW states that it funds the planting of a new tree for each customer that signs up for all of UW’s services.

It also supports the Wildlife Trust charity and raises money for disadvantaged communities in London, Bolton, and Bournemouth.

Section 2 – Business Model

Amway business model

The second section of this report explores the inner workings of Telecom Plus’ business model: the sales system and the income potential for independent sales representatives.

How does Telecom Plus/ UW market its services?

Utility Warehouse solely utilizes direct selling through its independent sales representatives/ freelance agents called UW Partners. And the company has a relatively simple multilevel marketing structure.

Telecom Plus/ UW’s compensation model explained

Although UW doesn’t provide readily accessible details of their multilevel marketing program, various online sources have highlighted its key features.

Telecom Plus compensation plan's schemaPin

UW’s MLM structure has the following levels, and partners move up the ranks as they refer more customers:

  • Starting level: Earns a customer gathering bonus of up to £40 per customer.
  • Qualified Executive: Has 6 personal customers and receives a 2.4 to 5.3% Customer Volume Commission (CVC) on all personal customers, and a 0.2 – 0.6% group CVC on all group customers.
  • Senior Executive: Has 10 personal customers and 50 group customers. Receives 2.4 to 5.5% CVC and 0.2 – 0.7% group CVC.
  • Executive Director: Has 15 personal customers and 250 group customers. Receives 2.4 to 5.8% CVC and 0.2 – 0.8% group CVC.

Other leadership ranks with promotional bonuses include:

  • Group Director
  • Marketing Director
  • Senior Marketing Director
  • National Marketing Director

How many UW Partners are there?

UW currently has a network of 45,000 freelance agents/ UW Partners earning bonuses by selling the company’s multi-utility services to friends, family, neighbors, and the general public.

How do you make money on Telecom Plus/ UW?

Customers can benefit financially from UW without being UW Partners.

Through the Refer-A-Friend scheme, a customer can get a £50 credit on their energy bill by referring a friend who also saves up to £200 when signing up for two or more UW services.

Customers can also make money by becoming UW Partners who are licensed distributors of UW’s services.

UW Partners earn upfront commissions (a bonus of up to £40) every time they sign up new customers and ongoing commissions (residual income) for as long as the customers stay with UW.

They also earn commissions from helping new Partners in their team sign up customers, plus residual income for the duration that those team members’ customers stay with UW.

Note that Partners don’t earn commissions directly from recruiting new Partners.

How much money can you make with Telecom Plus/ UW?

The amount of money UW Partners earn varies depending on how many services customers take and whether they are homeowners or tenants.

According to UW, Partners can earn up to £400 for every new customer signed up. However, the company advises that high earnings are not easily achieved.

Some UW Partners have reported high earnings.

As reported by The Guardian, an air stewardess from Lancashire made over £6,500 in bonuses in her first 18 months. But the average amount earned by Partners is less than £10 a week, based on estimations by The Guardian.

The commission paid to partners is roughly 3% of the company’s total revenue, which is significant considering that the company’s statutory profit margin is around 5.5%.

How to become a UW Partner

You can sign up as a Partner on the UW website. You’ll need to provide the Partner ID of the authorized UW Partner who referred you. If a UW Partner didn’t refer you, you can call the number provided on the signup page.

You’ll pay a registration fee of £10 for customers and £50 for non-customers.

Additionally, there’s a monthly license fee (£3) which starts three months after joining. This covers the cost of support and training.

How to sell Utility Warehouse products

The Refer-A-Friend scheme is only limited to customers’ close personal contacts. The customers share a customized link for signing up for UW services.

On the other hand, UW Partners can promote widely on social media beyond their neighbors, friends, and relatives.

The growth potential of Telecom Plus/ UW

A company’s growth potential can indicate the likelihood of independent distributors making money.

Fortunately, UW’s management expects it to win over a million new customers in the next five years as consumers look to bundle services and save costs.

Moreover, UW has a 2% share of the UK’s energy supply market, indicating ample room for future growth.

Section 3 – Services

Telecom Plus services

This section examines Telecom Plus’ services and what makes them stand out in the market.

What services does Telecom Plus/ UW provide?

Utility Warehouse provides services for energy (electricity and gas), broadband, mobile, and insurance (including home insurance, boiler cover, and income protection).

The company bundles such services with discounts for customers who purchase multiple services.

In addition, UW offers various programs to help with bill payment issues, like the Warm Home Discount scheme.

Various other UW products and services include a cashback card for customers to earn cashback of up to roughly 10% at multiple shops and online retailers.

What is unique about Telecom Plus/ UW’s services?

UW provides discounts on the UK’s energy price cap through its bundled services.

The company has a unique agreement with Eon, a German utility, supplying energy to UW’s customers at a fixed discount to the UK’s retail price cap. This allows Utility Warehouse to offer cheaper tariffs than the price cap, even with rising wholesale prices.

UW also bills all services together, making it convenient for customers to manage their expenses.

Moreover, the company offers a free iOS and Android mobile app to track spending and submit meter readings, free LED bulb replacement if you buy all services, and a free UW Wi-Fi Hub with broadband service.

Who supplies Telecom Plus/ UW’s services?

UW’s broadband operates on the Openreach network (similar to most other providers). For energy (electricity and gas), the company has a wholesale supply agreement with Eon. Lastly, UW uses the EE mobile network.

Where to buy Telecom Plus/ UW’s services

You can get a quote directly on UW’s website or through a UW Partner.

What happens if Telecom Plus/ UW goes bust?

If UW (or any other energy supplier) goes out of business, the energy market regulator, Ofgem, would manage the situation.

Ofgem’s safety net ensures customers’ gas and electricity supply will never be cut off or interrupted.

The regulator would also move customers to the best possible deal with a new supplier chosen to take over the business, and any debit/credit will be transferred to that supplier.

Are Telecom Plus/ UW’s services regulated?

Telecom Plus PLC is a public limited company registered in the UK and regulated by government authorities.

The subsidiary, Utility Warehouse Limited, is a private limited company fully regulated by Ofgem (The Office of Gas and Electricity Markets), Ofcom (The Office of Communications), and FCA (The Financial Conduct Authority).

This range of oversight authorities provides a broad assurance of service delivery.

Lawsuits and independent reviews of Telecom Plus/ UW

Telecom Plus has had several run-ins with regulatory bodies in the past.

In 2007, UW’s leaflets promoting its phone services were deemed “misleading” by the Advertising Standards Authority (ASA). Apparently, the services didn’t offer the advertised savings.

In 2021, Utility Warehouse had to pay out £95,500 to 2,700 customers who were overcharged when they switched suppliers or tariffs between 2013 and 2020. Eighteen other energy firms faced similar charges by Ofgem.

In 2020, the company also had to pay £650,000 for overcharging customers concerning the price cap. This was actually due to a system error, as stated by Ofgem. UW refunded and compensated 3,430 customers in receipt of the Warm Home Discount and made ‘goodwill’ payments. 

On the positive side, the company currently has a high 4.2 out of 5-star rating on Trustpilot from 29,482 reviews.

Besides, The Money Saving Expert found UW’s one-year fixed energy deal to be the cheapest ‘open-market’ (switchable) fix in September 2022.

Section 4 – FAQs About Telecom Plus

Amway FAQ

This section covers a few critical questions to give more valuable insights about Telecom Plus.

Is Utility Warehouse cheaper than other options?

According to UW’s official website, whether or not customers save money by switching to UW depends on individual needs and which services they choose. The company offers fixed and variable tariffs, with the fixed option protecting against future price increases, but it may not be the cheapest option for everyone. The company suggests that customers compare tariffs and services to determine which suits their needs best.

Is Utility Warehouse a pyramid scheme?

Utility Warehouse operates as a multilevel marketing company where Partners earn commissions by signing up customers and building a team of customers for other partners. However, they do not make money from signing up other partners, and the company states that the fees charged for becoming a Partner are used for support and training and do not generate profit for the company. Such fees amount to roughly 0.1% of overall revenues.

Does Utility Warehouse sell renewable energy?

Utility Warehouse offers a green tariff option for customers, which matches their electricity usage with renewable energy sources using renewable energy certificates. However, the company’s overall fuel mix is 8.3% renewable, 8.2% nuclear, and 78.3% fossil fuels. But, they state that they have installed over five million LED light bulbs in customers’ homes and planted a tree for every new customer since March 2020.

Sources

Author: Victor Nyorani

Victor Nyorani - Network Marketing Start

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