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Shell in exclusive talks to buy Post Office broadband arm

LaToya Harding
·2-min read
Logos are pictured at a Shell petrol station in Etlham, southeast London on September 30, 2020. - Royal Dutch Shell will axe up to 9,000 jobs or more than 10 percent of its global workforce, the energy giant said Wednesday as the coronavirus pandemic slams oil demand and prices. The Anglo-Dutch group will cut between 7,000 and 9,000 positions by the end of 2022, including 1,500 staff who have agreed to take voluntary redundancy this year, it said in a statement. (Photo by Ben STANSALL / AFP) (Photo by BEN STANSALL/AFP via Getty Images)
The FTSE 100 oil giant has emerged as the preferred bidder in the last few days, with TalkTalk and Sky also expressing an interest in the business. Photo: Ben STANSALL/AFP via Getty Images

Shell (RDSA.L) is in exclusive talks to acquire the Post Office’s broadband division in a deal that would transform its presence in the communications sector, it has been revealed.

The FTSE 100 oil giant has emerged as the preferred bidder in the last few days, Sky News first reported, with TalkTalk (TALK.L) and Sky also expressing an interest in the business.

The deal is expected to cost Shell less than £100m ($133m) and will likely take weeks to finalise.

The Post Office’s broadband arm has around 500,000 customers.

A source close to the Post Office said it would ensure that no postmaster is out of pocket as a result of the sale, with its telecoms arm accounting to just 0.3% of their total pay during the last financial year, the broadcaster said.

Nick Read, its chief executive, is also said to be mulling options for its insurance arm.

Reports of Shell scaling up in the industry follows its purchase of retail energy and broadband supplier First Utility in 2018. It rebranded the business Shell Energy Retail after it seized control.

Shell Energy retail has about 130,000 broadband customers in the UK and 870,000 domestic energy accounts.

READ MORE: 1.6 million premises still suffer with poor broadband as remote working continues

In October, Shell announced plans to hike payouts to shareholders, despite profits nosediving and mass job cuts as coronavirus hammers the industry.

The company posted adjusted earnings of $955m, an 80% decline on its third quarter a year earlier but still better than expected by analysts.

The company announced plans to drastically curb its net debt from $73.5bn to $65bn, and then distribute up to 30% of cashflow from operations to shareholders through dividends and buybacks.

Shell also emphasised plans to become a net-zero energy firm by 2050 “or sooner,” including commercialising hydrogen and biofuels.

It said both lower demand and lower oil and gas prices were to blame for lower earnings. Upstream production was down 14% year-on-year, “due to OPEC+ curtailments, lower gas demand and hurricanes in US Gulf of Mexico.”

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