Fone Logistics MD Ian Gillespie has reason to be happy. He has just clinched a deal that brings the distributor back into the Vodafone fold, three years after the firm was ejected as part of the operator’s move to consolidate its distribution channels.
This good news is a welcome change for Fone Logistics. The past year has been tough for the Newcastle based distributor.
In March, the company lost a swathe of business when operator 3 took its
third-party call centres in-house, forcing the distributor to make staff cuts. Six months later, Fone Logistics dealer Marmalade went bust owing the distributor over £400,000.
Then last week, a company restructure inflamed persistent industry speculation that the firm is trying to hide financial problems, despite strenuous denials from the distributor.
So it is no surprise that Gillespie is thrilled to deliver news of the Vodafone deal, pointing to it as clear evidence of Fone Logistics’ financial health.
‘We are here to stay,’ Gillespie says defiantly, dismissing industry speculation as ‘laughable’.
He continues: ‘We have been very open with all our partners about [the restructuring]. They are happy with us and I think that says it all. Would Vodafone sign up with us if there was a problem? Not at all.’
The deal sees the distributor working with a select number of partners to make b2b airtime connections to Vodafone via Yes Telecom.
Gillespie says the deal will enhance its other b2b network deals with Orange and Vodafone.
‘We want to be seen as a distributor of choice with a range of networks. To offer Vodafone brings real strength to the business and complements that portfolio. I believe the dealers can get incremental business for all the networks.’
However, he is keen to emphasise that the dealers he selects will not be taken from those working on the company’s other network accounts.
The new partners will also have to be prepared to go ‘beyond voice’, as Gillespie puts it.
‘We want partners with vision for the future, who are prepared to invest in the technical side of mobile rather than just voice,’ he explains.
To this end, Fone Logistics will be looking for a ‘small number’ of both mobile and internet dealers comfortable with technical convergence.
Partners will also need to be approved by Yes Telecom. Fone Logistics will oversee their training and support and will closely monitor their performance.
‘This is where distributors add value,’ says Gillespie, pointing to Fone Logistics’ online dealer access portal as an example.
‘We were the first distributor to launch a service like that five years ago,’ he proudly claims. The portal was developed in 2009 to include InTouch, a job tracking tool that allows customers to log in and follow the progress of each job.
Gillespie was always hopeful of a new deal with Vodafone. He explains:
‘The door was never closed to us, since it was never about our performance but more to do with Vodafone’s strategy… I have a 25 year relationship with Vodafone. They see us as a good distributor and so here we are, back again.’
Painful as it was, Gillespie says the loss of the original Vodafone deal meant the firm was better prepared for hard times when the recession hit.
He explains: ‘Losing Vodafone got us ready for the economic downturn. We looked at our cost base and we took swift action. It wasn’t easy, but we have always had a policy of managing costs responsibly.’
Fone Logistics has had to address its cost base once more this year, making four employees redundant in September, as a result of operator 3 taking its b2b business in-house. It is clear Gillespie found the task difficult.
He comments: ‘It is a bit of a family and it did not come easily to me as I know how it affects people’s family and children. It was hard, but I also have a corporate responsibility – if I hadn’t taken that decision it could have affected a lot more people.’
Nevertheless, the company’s staff remain loyal. Gillespie points proudly to the fact that more than 50% of the workforce belongs to the Fone Logistics ‘Five Years’ club. All members receive a watch and are treated to a party every year, at which new members are welcomed. Birthdays are celebrated with flowers for female staff and, in true Geordie style, 24 cans of lager for male employees.
Fone Logistics’ independence is seen by Gillespie as a key part of its success, along with his 25 years in the thick of the business.
He says: ‘We are proud that we are independent and not part of a bigger group. That gives us an edge in this marketplace, and I know the business inside out.
I know what is happening, which means we can be light on our feet and make decisions quickly.’
So with Vodafone back on board, what does the future hold for the distributor? Plans for further acquisitions appear to be on the back burner for now. Gillespie says: ‘We are always looking for opportunities but we are more interested in acquiring and keeping customers than acquiring competitors.’
Nor does he foresee much more industry consolidation ahead, believing the nature of industry relationships is changing and maturing after a turbulent time.
He says: ‘There has been consolidation right the way through the channel and out of that has come stronger partnerships between us and the networks, and between us and our partners.
‘It has also become more about partnerships than transactional relationships and more about the long term rather than the short-term thinking. It’s about making sure you create value for all shareholders.’