O2 handset recycling contract tender process nears its conclusion after six months.
Brightstar 20:20 and Redeem have been shortlisted for O2’s “lucrative” handset recycling contract – worth around £4 million a year*.
The three-year contract, which has been held by Redeem since O2 launched O2 Recycle in 2009, is due to expire shortly.
Both Redeem and Brightstar 20:20, who each declined to comment due to a strict NDA, have been holding talks with O2 for around six months – and are awaiting a final decision.
A source from Redeem claimed a verbal agreement has been agreed with O2 to continue the deal – although this has been officially denied.
O2 confirmed the deal is currently being reviewed but refused to discuss involved parties, insisting no decision had yet been made.
“I can confirm that the contract for our recycle scheme is currently being reviewed but we have nothing to announce at this time.”
A source close to the situation told Mobile News: “The recycling space has become big business in the UK and has become incredibly competitive, which is why O2 is reviewing its options.
“This is a huge contract for Redeem and one which it is doing everything it can to retain. It would be a huge blow if it went to Brightstar.”
To date, O2 customers have traded more than a million devices through O2 Recycle, with payments to customers now “approaching” £100 million.
According to leading recycling comparison website CompareMyMobile, recyclers will typically make between five and seven per cent profit on all handset purchases.
Success for Brightstar 20:20 would take its number of managed operator recycling contracts to three – having already sealed deals with Vodafone and EE. It is also understood to hold a deal with Tesco. It claims to be the world’s biggest buyback and trading company, having acquired British organisation Mobile
Phone Exchange (which held the Vodafone deal) in 2012 and is expected to buy around 10 million devices in 2014 globally.
The recycling market in the UK is set to grow by 11.4 per cent this year to 6.7 million handsets, with figures topping 16 million by 2018.
*Figures related to the value of the deal were calculated by Mobile News, taking in to account the average number of handsets purchased by O2 over a 12 months period, projected growth of the space, and the typical margins earned on a per handset basis.
All information in the above article was sourced exclusively by Mobile News staff and was first published October 20.