Phones4u suffers Vodafone blow

Mobile operator Vodafone said today it will not renew its network agreement with retailer Phones4u.

Vodafone said it will not renew its network agreement with retailer Phones4u
Vodafone said it will not renew its network agreement with retailer Phones4u

The current tie-up ends in February and Phones4u said it was "surprised and disappointed" by the operator's decision, which will see it enhance its distribution partnership with Dixons Carphone.

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

Phones4u, owned by private equity firm BC Partners, said it was in discussions with a number of mobile network operators in a bid to 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 July 31, accounting for 27% 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% of Phones4u's total prepaid 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 added: "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 today 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, which expires in February 2015."

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 completed last month. Currys/PC World is owned by Dixons Carphone.

In January mobile operator 02 ended its network agreement with Phones4u, which accounted for 8% of the retailer's total contract connections last year.