Mobile giant Vodafone to hang up on Phones4u deal

HIGH street retailer Phones4u was dealt with another blow yesterday as mobile operator Vodafone said it will not renew its network agreement with it.

Vodafone is concentrating on its deal with Dixons Carphone. Picture: Getty
Vodafone is concentrating on its deal with Dixons Carphone. Picture: Getty

The current tie-up ends next February and Phones4u said it was “surprised and disappointed” by the operator’s decision, which will see Vodafone enhance its distribution partnership with Dixons Carphone.

Phones4u, which has around 720 UK stores, said the Vodafone deal represented about £212 million of sales and about £18.5m of earnings in the year 
to 31 July.

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In January, mobile operator O2 ended its network agreement with Phones4u, which accounted for 8 per cent of the retailer’s total contract connections last year.

Phones4u, owned by private equity firm BC Partners, said it was in discussions with a number of mobile network operators in a bid to replace the volume of connections it has with Vodafone. But it added there was “no certainty” to the outcome of these talks.

The Newcastle-under-Lyme-based retailer still has existing deals with EE, Orange, T-Mobile and Virgin Mobile.

Phones4u said it signed 430,000 contract connections for Vodafone in the year to 
31 July, accounting for 27 per cent of the retailer’s total contract connections.

It also signed 125,000 pay-as-you-go connections for the operator over the same period, amounting to 16 per cent of Phones4u’s total pre-paid connections.

Phones4u chief executive David Kassler said: “Although we are disappointed with the decision by Vodafone, Phones4u continues to trade well in the market.

“We have high levels of market share, especially in the youth segment, and our own network, Life Mobile, was launched in 2013, is now fully road-tested and enjoying a great first year with customer growth ahead of our expectations.”

A Vodafone spokesman said: “Earlier this year Vodafone UK said it was reviewing its distribution strategies in the UK and that it would be opening a further 150 stores and creating 1,400 new jobs.

“As part of that review, Vodafone confirms that it will be enhancing its distribution partnership with Dixons Carphone from early next year and will not be extending its existing contract with Phones4u.”

Phones4u has an agreement to run mobile concessions in 160 Currys/PC World megastores until next May, but this agreement will also not be extended as a result of the Dixons Carphone merger, which was completed last month.

Currys/PC World is owned by Dixons Carphone, itself created in a £3.7bn tie-up between Dixons Retail, owner of Currys and PC World, and Carphone Warehouse, one of Europe’s largest telecommunications retailers.

The merged retailer brings together 3,000 stores and it has plans to open more than 20 further outlets by Christmas. Phones4u has more than 500 standalone stores across the UK.

It has been reported that BC Partners is considering listing the phone retailer later this year.