The multibillion-pound fund that launched Octopus Energy is exploring plans to launch a new mobile network in a move that could radically shake up Britain’s telecoms market.
Octopus Group, which helped to launch Britain’s biggest energy company a decade ago, is plotting an expansion into mobile services to challenge the four, soon to be three , companies that dominate the market.
The move suggests that Octopus is looking to replicate the success of its energy business, which has now overtaken British Gas as the country’s largest household supplier.
The new mobile virtual network operator (MVNO) would not build its own infrastructure but instead piggyback off one of the existing networks run by BT-owned EE, Virgin Media O2, Vodafone and Three.
The UK mobile market is awash with MVNOs, which often try to attract customers with cut-price deals or specialised offers such as data-focused contracts.
However, the majority of these brands are owned four major networks and it has been years since a player outside the telecoms industry has established a foothold in the market.
Superdrug set up its own mobile brand in 2018, while Asda and Tesco launched their mobile offerings in 2007 and 2003 respectively.
Octopus is understood to have approached at least one of the major networks through Fern Trading, a subsidiary that owns a handful of telecoms assets, to discuss a potential tie-up.
The Octopus discussions are believed to be linked to Y Corporation, a little-known mobile company owned by Fern Trading that has a wholesale agreement to use Three’s network.
Sources said Y Corp was now exploring opportunities to offer eSim-only contracts to both business customers and consumers.
The company appointed Adam Dunlop, the former TalkTalk consumer boss, as a director in January to lead the expansion.
Octopus Group was founded in 2000 by Simon Rogerson, Christopher Hulatt and Guy Myles after the trio quit their jobs in asset management in their early 20s.
The company is best known for launching Octopus Energy, which has grown from nothing in 2015 to serve almost 13m customers today. The provider has since been spun out of the group but it remains the largest external shareholder.
Octopus Group has since expanded into a number of different sectors through its investment arm, which manages funds of roughly £10bn for more than 63,000 investors.
It is unclear how the new mobile service will ultimately be branded. However, a new provider under the Octopus brand would allow the group to bundle more services together as it expands its operations across telecoms and utilities.
One insider said the company viewed mobile as “totally complementary” to its existing services and the “missing piece of the puzzle”.
Octopus Energy is known for its customer service and user-friendly interfaces, which are both built upon its proprietary Kraken technology platform. The software is also used by more than 100,000 broadband customers signed up to Cuckoo, a internet provider also owned by the Octopus Group.
Customer service has long been a bugbear of the telecoms industry, with a recent survey by consumer group Which? revealing that the big four providers were largely outshone by their smaller rivals in terms of value for money and customer service.
Mobile mega-merger
Octopus’s plans come as the mobile industry gears up for its biggest shake-up in years as Vodafone and Three prepare to combine in a £15bn mega-merger .
The tie-up has ignited a price war as telecoms operators scramble to beef up their value offerings in both mobile and broadband.
Giffgaff, the budget mobile network owned by O2, is trialling a cut-price broadband service while BT is understood to be mulling the launch of a new discount mobile service.
If Y Corp were to maintain its wholesale deal with Three, it would gain access to the UK’s largest mobile network once the merger with Vodafone completes.
Octopus subsidiary Fern also owns a number of full-fibre broadband firms including Cuckoo and AllPoints Fibre.
Fern recently announced plans to merge four of its challenger internet providers, dubbed “alt-nets”, into a single company as the industry braces for a wave of consolidation.
Octopus Energy previously had a foothold in broadband after acquiring Shell’s household energy business in 2023. However, it sold off the broadband business to TalkTalk last year.
Octopus declined to comment.
Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.