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A company backed by Octopus Group, the multibillion-pound fund that owns the eponymous energy company, is plotting the launch of a new mobile telecoms operator.
Y Corporation, a little-known mobile provider owned by Fern Trading — a subsidiary of Octopus’s investment arm — is understood to be exploring opportunities to offer virtual sim-only contracts to both businesses and consumers, in a move that could challenge industry incumbents such as BT-owned EE and Virgin Media O2.
The move could represent a significant shake-up to the UK’s mobile telecoms offering, which is dominated by the four network operators including soon-to-be-merged Vodafone and Three.
Fern has approached Three to explore the plans, with Y Corp already having an existing wholesale arrangement with the network operator, according to two people familiar with the situation. The plans were first reported in the Sunday Telegraph.
The Octopus-backed competitor would not use its own network infrastructure. Instead, it would be a mobile virtual network operator (MVNO), and piggyback on the existing network of another provider.
Under the terms of the Vodafone-Three merger, MVNOs with agreements to use Three’s network are entitled to the same deal being rolled over into the merged entity, which will become the UK’s largest mobile network upon the tie-up’s completion.
Octopus appointed Adam Dunlop, the former TalkTalk consumer chief, as a director in January to explore the plans, according to a person familiar with the group’s thinking.
Any new virtual operator will not use the Octopus brand, the person added.
The UK’s mobile market is split into two layers, with the four network operators being joined by a host of virtual network players, which often offer cut-price deals to consumers while utilising others’ network infrastructure.
However, many MVNOs are owned by the larger operators, including VMO2-backed Giffgaff and Vodafone subsidiary Voxi.
Karen Egan, head of telecoms at research firm Enders Analysis, said the hands of MVNOs had been strengthened over recent years due to the shift to sim-only services, struggling network operators “very keen to give them favourable terms”, and the cost of living crisis.
“Companies with existing strong retail distribution systems are particularly well positioned to perform strongly in the MVNO market,” she added.
Research from Enders showed that 2024 was the first year in history when the UK network operators lost contract subscribers, while by contrast MVNOs added 1.6mn.
Octopus Group, which was co-founded in 2000 by chief executive Simon Rogerson, now manages more than £12bn in assets, while its energy subsidiary surpassed British Gas in January to become the UK’s largest residential energy provider.
Octopus and Three declined to comment.
