Devika: T-Mobile cuts don’t add up

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It was only a matter of time before action was taken on coalface retail at T-Mobile UK.

New managing director Richard Moat has been recruited to make changes that can be brought to bear on the unit’s bottom line, and acquisition costs are a hugely significant part of capital expenditure.

But staff retorted “outrageous” at its new changes to its retail stores. It is easy to see why, when there is little in the way of a replacement strategy for securing sales, the lifeblood of its business. And little explanation of why.

Staff are left scratching their heads. Staff have been cut, hours have been cut and the proverbial ‘carrot’, the  element that drives their behaviour, has been removed.

Prepay-to-contract migration is an essential part of new network strategy. It is a holding pattern in the economic climate for customers unready to commit longterm.

But it drives loyalty and drives up overall ARPU, even if contract ARPU is diluted. So why cut commission so drastically for driving that migration?

It makes more sense, we hate to say, to cut third-party acquisition costs and ringfence and drive up value within an existing base through a direct sales estate. That will likely come too, just with a more meagre resource to sweat the asset.

 

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