Angry EE b2b dealers are accusing the operator of damaging their businesses as part of a cost cutting drive ahead of flotation plans.
They claim EE is introducing onerous payment models as part of a wider strategy designed to boost the operator’s EBITDA ahead of its stock market flotation later this year, aimed at raising funds to pay for its 4G launch.
The accusations came after dealers were hit this week with swingeing cuts to their Orange and EE4G commissions following changes to upgrade and revenue payment models.
Dealers complained that the changes came amidst an ongoing b2b dealer payments crisis triggered by software problems which have dogged EE’s payment platform since early October, causing severe payment delays to scores of Orange and T-Mobile b2b dealers.
The changes see upgrade periods on Orange b2b contracts slashed from 90 days to 30 days and EE4G b2b deals moving from a flat rate model to the Orange revenue share model, with dealers paid just 30% upfront on new connections, from 1 April. It is also reducing commissions on its Orange
Solo plans from 1 March and on 24-month bandings.
Dealers vented their fury at the cuts, pointing to rumours that joint EE owners Deutsche Telekom and France Telecom are planning a £10bn London stock market floatation this year, which would see 25% of the joint venture sold off. They claim the drive to cut costs ahead of the floatation is at the expense of their businesses.
One dealer said: ‘We are collateral damage. Whoever made this decision has no idea what they are doing. We are looking at losing 10% of our income. Either Olaf Swantee has no understanding of the indirect channel or he doesn’t give a sh*t.’
Orange dealers warned that EE will lose b2b business to rival networks following the cut in its b2b upgrade loyalty period. One said: ‘We are already under attack from other networks countering the EE4G launch and now they are reducing our commissions and customers don’t have a buy-out fee. Unless customers are desperate for
4G we will lose customers from this.’
Resellers selling EE’s 4G b2b deals expressed shock that EE had changed the payment method so soon after launch. One major dealer said: ‘This is a very, very bad move. It causes us tons of additional work but it’s good for EE because it looks better on their books ahead of their flotation.’
Others accuse EE of forcing dealers to shift customers to 4G deals in a bid to improve 4G sales. EE was criticized this week for an ‘unspectacular’ start to its 4G launch after its full year results showed the operator making 201,000 net additions across 3G and 4G contracts in the quarter after it launched.
In a separate development, EE this week pledged to manually pay all delayed and incorrect b2b Orange and T-Mobile commissions caused by software problems following the integration of its payment platforms in October last year.
However, dealers dismissed this as an attempt to ameliorate the impact of the planned cuts to dealer commissions. One said: ‘The pigeons are coming home to roost. EE has cut so many jobs recently that there is no one at the coalface who understands the payment platform. Nor is there anyone who really understands how the indirect channel works and how these cuts to commissions will impact on us and their business.’
EE defended its move to cut upgrade periods and Orange and EE4G commissions. A spokesman said: ‘We stand by our decision.’
EE chief: Indirect remains ‘key’
EE CEO Olaf Swantee accepted the company has had issues with payments to the indirect channel but stressed the sector remains key to the operator.
Speaking to Mobile in response to dealer concerns, he said: ‘I can acknowledge we have had issues in payment of commissions but we are working around the clock to fix that and put back-up systems in place. We have done this over the past few weeks. The partner channel is very key for us and very important; not just for consumers but for businesses. We recognise the importance of them.’
Author: Carol Millett