Lack of investment made acquisition unattractive
EE considered buying Phones 4U in 2013 but turned the idea down partly because the retail chain was old-fashioned and had suffered from lack of investment.
So said Orange vice president of Corporate Social Responsibility Christophe Naulleau in the High Court of Justice.
Naulleau was being questioned by Phones 4U barrister Mr Kenneth MacClean on Day 16 of the civil case, in which Phones 4U in Administration is suing the main mobile networks and their parent companies alleging illegal collusion put Phones4U out of business in September 2014.
“Phones 4U was not a modern company. They had not invested in their stores since ages. So this was the acquisition of a poor, old-fashioned, obsolete network of stores that and we would have had probably to bear the risk of a restructuring” said the Orange VP.
At the time of the merger between Deutsche Telekom’s T-Mobile operation and Orange’s Orange operation in the United Kingdom, both Deutsche Telekom and Orange wanted to do something about the indirect description situation in the UK due to the high rate of commissions and connections cash they were paying indirect resellers like Phones4U and Carphone Warehouse.
The plan to acquire Phones 4U did not go through mainly due to the objections of Orange deputy chief financial officer Marie-Christine Lambert. Her views, said Naulleau, carried serious weight.
The deputy CFO was also against the re-branding of Orange to EE said Naulleau.
“We had a lot of respect for her and for her experience and knowledge and the balance between the figures the financial figures, and the understanding of the business complexities.
“She was not in favour of the creation of the EE brand. But she was not followed. She inspired some of us on some topics, but she was not followed in her recommendation not to replace the Orange brand with the EE brand.”
It cost £150 million to rebrand all Orange and T-Mobile stores as EE. Naulleau said this was possible because of the savings of no longer paying high acquisition costs after withdrawing from Phones 4U.
The case continues.