One.Tel

» see onetel.com.au as it lived, on the wayback machine

~ the obituary ~

One.Tel's entire life fits inside the six years i spent learning how to be online in turkey, and the name never once crossed my screen. There was no reason it should have. It was an australian telephone company selling to australians, and the only part of the story with any international reach is the part about whose sons were on the board. I am writing this from the far side of a collapse that was front page news in a country i have never been to.

Jodee Rich and Brad Keeling founded it in Sydney in 1995 with roughly five million dollars in seed capital. The pitch was not infrastructure. It was resale: buy capacity off Telstra and Optus at wholesale, put a brand on it that did not sound like a utility, and sell it to people in their twenties who had never chosen a phone company before. It listed in november 1997 at $2 a share for a market capitalization of about $208 million.

Then the money arrived. James Packer and David Lowy each put in five million for spectrum in september 1998, and from february 1999 News Limited and Packer's Publishing and Broadcasting Limited committed sums that ran past $700 million over three years, with another $280 million following in march 2000. James Packer and Lachlan Murdoch both sat on the board. Two media dynasties had decided that the fourth mobile network in Australia was worth owning.

~ the case file ~

~ what they actually sold ~

The product range spread as fast as the funding did. Mobile resale first, then long distance, then an internet service called One.Net, then a build of its own GSM network after the 1998 spectrum auction, then operations in the UK, the netherlands, switzerland, france, germany and hong kong. Prepaid mobile was the wedge that worked best, because it sold to exactly the customers other carriers were declining on credit checks.

The numbers went up in the way that keeps investors quiet. Revenue reached A$653 million by 1999 and the customer base hit 2.2 million by 2000. The market capitalization touched A$5.3 billion on 26 november 1999 and put the company inside Australia's thirty largest. In the same period the company lost A$291 million in a single year, and the administrator later concluded it had been insolvent from march 2001, two months before anybody said so out loud.

~ the day it died ~

The last rescue was a rights issue of A$132 million at five cents a share, underwritten by News and PBL, announced in may 2001 as the thing that would carry the company through. It was withdrawn. On 29 may 2001 the directors appointed Ferrier Hodgson as administrators, and a telephone company with 2.2 million paying customers stopped being a going concern inside a single afternoon.

The Australian customer base, acquired for more than $200 million, went to Optus and Telstra for a few million dollars. The UK operation was sold to Centrica in 2001, passed to Carphone Warehouse in december 2005, and the One.Tel name was phased out of Britain by late 2007. Nothing was rescued as a company. It was parted out.

~ the next chapter ~

What followed was one of the longest and most expensive civil actions in Australian legal history. ASIC pursued Rich and the finance director over whether the board had been told the truth about the company's position, and on 18 november 2009 Justice Austin dismissed the case, finding that ASIC had failed to prove its allegations. Eight years of litigation produced a judgment running to thousands of paragraphs and no finding against the directors.

The liquidation itself finally wound up in 2017, sixteen years after the administrators walked in. That is the real measure of the thing: a company that took six years to build and go under, and eleven more to finish burying. Australia got a permanent lesson in what happens when the cheapest mobile plan in the market is cheaper than the network it runs on.

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