Airtime distributors are struggling to hit their O2 targets for the quarter, which closes June 31.
Dealer and distributor sources claimed last week the O2 distribution contracts of Hugh Symons Communications (HSC) and Redstone are in the balance.
HSC put an extra £100 upfront bonus on all new O2 business as Mobile News went to press, including voice, broadband and sharer tariffs. It has also been aggressively canvassing rivals’ dealers in an attempt to win new O2 business, and to hit targets ahead of the June 31 deadline.
Some dealers claim to have been contacted up to three times a day by HSC offering them bonus deals and rewards for new O2 connections.
Rivals are angry at HSC’s disruption of the market, when new business is hard to come by anyway and they are stretched to meet O2’s target of 1,500 new connections per quarter. Partners are ranked by O2 on new business, secondary connections, churn and ARPU.
Avenir has also been hugely aggressive on O2 commissions in recent weeks, but its O2 push is viewed as a direct response to the loss of its Vodafone contract in February. O2 considers it of strategic importance in the circumstances.
Of five O2 Centre of Excellence distributors, only Fone Logistics and Avenir are hitting new business volume targets consistently. MoCo is struggling also, but has a loyal and large O2 base. HSC and Redstone are considered most at risk, with sources claiming the pair are on performance reviews already for failing targets.
Neither was available for comment.
O2 said: “We are unable to discuss the performance of any of our partners.”
Distributors agreed last week O2 is likely to make a “sacrificial lamb” of one of its existing partners at the end of the quarter, although O2 could also restructure its key performance indicators (KPIs) in light of new business written.
All distributors have claimed to be finding new connections, in particular, hard to come by, and said O2’s revenue share scheme had complicated processes and cashflow in the difficult economic climate.
All have restructured their commercial packages from O2 so dealers are afforded greater upfront payments.
At best, they stand to make a slim margin on O2 contracts at month 21 of a two-year deal, and at worst they are making a loss on their offers in a desperate attempt to retain volumes in the short term and survive in the long term.