Phones 4u faces battle for high street survival

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Vodafone axe is a ‘kick in the teeth’ and retailer could ‘disappear’, say industry analysts

The future of Phones 4u was last week plunged into doubt after Vodafone became the latest network operator to terminate its partnership with the retail firm.

The decision by Vodafone, which has worked with Phones 4u since 1996, will take affect from February next year and follows exits from O2 in January this year and Three in April 2012.

As an added insult, Vodafone, which made the decision following an independent partner review, has since committed its long-term future to rival Dixons Carphone. It means that as of March 2015, Phones 4u – the UK’s second-biggest retailer behind Carphone Warehouse with 700 stores – will only offer services running off the EE network (EE, Orange, T-Mobile, Virgin and Life Mobile).

No way out
Industry analysts fear this could be the beginning of the end for the 18-year-old firm.

Ovum analyst Steven Hartley said:  “I really can’t see a way out for them. The only thing I can  see, unfortunately, is Phones 4u disappearing.” Verdict Retail analyst Matthew Rubin described the announcement as a “kick in the teeth” for all involved at Phone 4u.

“It puts them in a really weak position. I wouldn’t go as far as to say it’s terminal but it’s got to be a bad sign of things to come.”

Canalys senior analyst Tim Coulling added: “I don’t see them lasting for very long if they lose other operator partners. It makes sense for the operators to trim down when you’ve got the beginnings of a dominant player in the market place in Dixons Carphone.”

Phones 4u chief executive David Kassler (pictured) said Vodafone’s decision was disappointing with the mobile operator making it “apparent” an extension of the existing deal was unlikely.

Reconciliations?
Kassler said Phones 4u was in discussions with existing partners, other networks and third-party MVNOs to seek to reallocate the Vodafone volume.

Mobile News contacted O2, which insisted there were no plans for a return to Phones 4u, as did sources at Three. O2 accounted for less than 10 per cent of contract sales at Phones 4u at the time of its departure whilst Three business was said to have been minimal.

“Although we are disappointed, Phones 4u continues to trade well in the market. We have high levels of market share, especially in the youth segment,” said Kassler.

“Transactions and search traffic through our new mobile commerce site are growing rapidly as customers increasingly look to begin their purchase journey online, and they are continuing to choose to shop with Phones 4u.”

Vodafone statement on Phones 4u decision
“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.

“Vodafone will be enhancing its distribution partnership with Dixons Carphone and will not be extending its existing contract with Phones 4u. We will continue to work with a range of other indirect partners, who represent an important part of our business mix.”

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