UNITED UTILITIES, the water and energy supplier, looks set to cut the price of its Your Communications telecoms business after receiving offers significantly below its hopes.

Your Communications, a provider of voice, data and mobile services to businesses and the public sector, has been on the market for nearly a year. United Utilities had hoped to secure a price of about £200 million for the division.

However, sources say that the process is in disarray after the business drew only a few offers, “well below” £200 million. Bidders for the business are thought to include Carphone Warehouse, the telecoms retailer and Thus, the telecoms group that recently failed in its bid to acquire Cable & Wireless, BT’s main rival. Thus is understood to have said it would not pay more than £150 million for Your Communications.

Figures showing a slowdown in revenue growth will not have helped United’s chances of securing a top-end price.

United Utilites disclosed in July that Your Communications, which, in the year to March 2004 turned over £185.6 million, had suffered in the first quarter from a weaker telecoms market, which had led to slower expansion in underlying revenues for the Manchester-based business.

United Utilities says that it does not regard its telecoms activities as an integral part of its core business and will look to exit “when shareholder value can be maximised”.

United Utilities appointed Ernst & Young to investigate a possible sale of the business last September.

Like its peers, Your Communications is operating in an ever-tougher market, in which companies are fighting to provide the cheapest products. After the merger of Cable & Wireless and Energis earlier this year, analysts are expecting more consolidation to take place as companies seek to compete better.

• Charles Dunstone, the founder of Carphone Warehouse, the mobile phone retailer, is preparing to start an internet phone service. Mr Dunstone, said that “at some stage” he would join the move into voice-over-internet protocol (VoIP). However, he also cautioned investors not to get too carried away with the new technology. “It will have a significant impact on the market but it is not going to be an overnight revolution,” he said. Though the technology has been around for many years recent internet phone deals have raised interest in VoIP. Skype, the pioneer of the technology, was snapped up by eBay, the auction company, earlier this month for $4.1 billion (£2.3 billion) — a price that many analysts felt was over-inflated.

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