BT in early talks to buy refurbished gadget retailer musicMagpie

Today, musicMagpie confirmed it is in early-stage acquisition talks with BT and Aurelius Group in a filing to the London Stock Exchange. BT's interest in the online retailer of refurbished electronics and second-hand media, which has struggled with falling sales and profits, follows last month's launch of the EE ID platform, through which the telco seeks to diversify its consumer offering.

The filing specifies talks are "at a very early stage," adding there is no certainty either company will make an offer. Any "firm intention to make an offer" must be declared by December 18, although an extension is possible.

Kester Mann, director for consumer and connectivity at CCS Insight, called BT's interest unexpected. "Although second-hand is an important growth opportunity for the mobile industry, a potential acquisition in this market by BT comes as a bit of a surprise," he said in remarks emailed to journalists.

"However, a recent update from EE may have offered an interesting hint: the firm said that it aims to push harder into consumer electronics retailing by offering a broader range of products to both existing and potential customers using a new digital platform called EE ID. Acquiring an existing retail brand could accelerate this strategy as EE looks to stir more engagement with its customers and promote greater use of its app," he added.

Related:Fiber fury and 7,000 job cuts show more old BT than New EE

More flexibility, less CO2

Last month, EE launched the EE ID platform to offer new services including home security and insurance, while expanding the consumer electronics portfolio.

Commenting on the launch of EE ID, Dario Talmesio, research director at Omdia (Light Reading's sister company), told Light Reading at the time that "creating a marketplace to retail accessories, hardware, digital and financial services is not easy, and the market is incredibly crowded and saturated."

It is worth noting EE seeks to offer more flexible purchase options. It seems musicMagpie's strategy ties in with this plan, given it offers rental options for devices such as phones and tablets.

MusicMagpie, however, struggled earlier this year with sales and profits falling amid postal strikes and weak consumer confidence. Since its IPO in 2021, the company's share price has fallen from £1.98 (US$2.47) to £0.24 ($0.30) – despite a roughly 24% boost today following the news of negotiations with BT and Aurelius.

(Source: Google Finance)

The market for refurbished technology itself, however, has been in rude health, as Mann points out. "A potential deal for musicMagpie reflects the burgeoning market for second-hand devices. This industry trend is due to several factors, including the increasing residual value of smartphones, widespread trade-in schemes, greater availability of refurbished phones, cost-of-living concerns and environmental considerations."

Related:EE to broaden services as it becomes BT's flagship consumer platform

Apart from driving demand, the environmental credentials of refurbished phones and other electronics are also important for the sector's overall efforts to cut emissions. User devices are a large source of CO2 emissions, mostly due to manufacturing.

For illustration, data from French regulator ARCEP shows 79% of digital carbon emissions in the country come from user terminals, such as mobile phones, TVs, etc. As a result, increasing the lifespan of individual devices can reduce the overall amount of carbon emitted.