The Phone Co-op is an ethical telecommunications services provider, selling everything from broadband to landline phone rental, including mobile phone services, website hosting and other internet services. Like other co-operatives, the Phone Co-op has an open membership policy but uniquely when customers start buying a service from the Phone Co-op they are invited to become members, by opening a withdrawable share account.
This has allowed the Phone Co-op to use community shares to drive its business as a successful modern take on the original nineteenth centry idea of a member-owned consumer co-operative.
Founded in 1998 in Chipping Norton, Oxfordshire, with just £36,000 to get off the ground and a small, though passionate, group of people behind it, The Phone Co-op has now consolidated as one of the fastest-growing and most successful co-operatives in the UK. 15 years after starting trading, its turnover has reached over £10m and it has adopted the national “The Co-operative” brand – trading as The Co-operative Phone and Broadband, The Co-operative Business Telecoms, and The Co-operative Mobile since September 2012.
The Phone Co-op operates nationwide from its offices in the Cotswolds, Manchester and London, providing fixed and mobile telecommunications services to over 23,000 business and residential customers. It has over 9,500 members (almost 50% of its customers).
HOW DID THEY RAISE THEIR INVESTMENT?
Apart from a small £10,000 start-up loan, The Phone Co-op has never required either commercial or bank loans. Its expansion has been funded partly from profits but also from its members’ investments via community shares. By encouraging its customers to become members, they are entitled to a vote at the AGM, to elect directors, and to receive a dividend based on their purchases from the co-operative, currently set at 2.5%. They also receive interest on their share account, currently paid at 1.75% gross per annum.
Crucially, the Phone Co-op runs an open offer in which funds can be withdrawn at any time without penalty and are normally processed within one week of receipt of a member's request.
Its cheif executive Vivian Woodell says that member capital has directly helped The Phone Co-op’s growth, enabling this consumer co-operative to expand its services. Adequate working capital also means The Phone Co-op can pay suppliers early, benefiting from early payment discounts, and thereby increasing the profits made for the benefit of the co-operative’s members.
Capital has also supported further investments. Through its Co-operative and Social Economy Development Fund, The Phone Co-op invests in community projects that reflect is co-operative approach such as FC United and Torrs Hydro.