118 118 rings up big profit even as sales dwindle
ONE of Britain’s biggest directory enquiries firms suffered a 10 per cent drop in turnover in 2014 but still booked an astonishing 90 per cent profit margin.
The Number UK, which owns 118 118, rang up £62million in sales while gross profit was £56million. The huge return comes amid rising fury over high charges and fears that the poor and elderly may still rely on the dial-up service.
The directory enquiries market is in decline with the advent of smartphones making searching for a phone number on the go much easier, by using the internet. But for 118 118 the old-fashioned dial-up enquiry is still a lucrative business with a 45-second call to the service costing as much as £6 according to recent research.
The Number UK said in its accounts for 2014 that its own research into its most frequent users found most had made their most recent call to the service from a smartphone and the majority were in the 18 to 44 age group. It claimed the findings underlined ‘the continuing relevance of 118 118 as a valuable service in the smartphone age’.
Directory enquiries was deregulated in 2003, before which BT provided it for a fixed fee of 40p.
Competition has not seen prices drop, however, with consumers finding it hard to remember more than two numbers – 118 118 and BT’s service, 118 500. BT charges over £5 for a 45-second call.
The Number UK provides a free service from a landline on 0800 118 3733 – users just have to listen to an advert. The regulator Ofcom changed the rules on directory enquiries in July, meaning that the cost of calling any 118 number is split between an access charge, set by the telephone network, and a call charge set by the provider.
The Number UK’s total pretax profit hit £77million in 2014, it said, boosted by a £30million royalty it received. The Number UK has subsidiaries all over Europe.
It is owned by a New Yorkbased business called kgb – knowledge generation bureau.