Shares in Capita pushed through the £10-mark for the first time in the FTSE 100 outsourcing group’s history after it won a decade-long contract worth £1.2bn to provide call centre and online customer services for O2.
Shares in the support services company rose 6 per cent to £10.05 after it was awarded preferred bidder status to provide customer-facing communications for O2, the UK’s second-largest mobile operator with 23m subscribers.
The deal with O2, which is owned by Spain’s Telefónica, prompted Capita to increase its organic growth forecast for 2013 by 2 percentage points to 8 per cent.
“Rather than having myriad suppliers providing O2’s customer services, we can find savings for O2 and advance their technology such as webchat,” said Paul Pindar, Capita’s chief executive.
“This cements our position as the market leader in this type of outsourcing.”
Hector Forsythe, analyst at Oriel Securities, said that although the contract would bolster Capita’s revenues, the impact of initial set-up costs would not reflect on the bottom line until 2014.
“This is more than a call centre operation contract as it involves action to combine all O2 customer engagement channels in one structure,” Mr Forsythe added.
The contract will commence on July 1 and entails some 3,700 O2 staff located in offices in Glasgow, Leeds, Preston Brook and Bury coming under the management of Capita. The terms of the employees’ contracts are to be kept unchanged.
“This deal means Capita, who already have 1,800 people handling enquiries from O2 customers, will take responsibility for all outsourced activity,” said O2.
The contract is Capita’s single-largest deal in terms of annual revenues, outstripping a larger agreement with Staffordshire county council worth £1.7bn over 20 years.
The customer services deal comprises an extension to Capita’s current contracts with O2 worth £370m and £830m of new business, making the mobile group Capita’s largest customer, providing some 5 per cent of its annual revenues.
Capita is one of the biggest outsourcers to the public sector and provides services including collecting council tax for two-thirds of homes in England, the TV licence fee for the BBC, and managing recruitment for the British army.
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