Phones 4u has launched its fightback in the face of Carphone Warehouse’s £3.7bn merger with Dixons Retail, inking deals with new retail partners and ramping up its online assault, to build market share.
A Phones 4u spokesman told Mobile the retailer was set to announce a number of retail deals ‘in the near future.’ Names in the frame include supermarkets Waitrose and Morrisons as well as John Lewis and electronics retailer Argos and online retailers.
There was also speculation from industry sources that Phones 4u may pull out of its deal with Dixons Retail early on account of the merger with Carphone.
The deal to run 160 concession stores is worth £90m to Phones 4u – equivalent to 10% of its turnover. But, though the agreement has another year to run, a senior source predicted Phones 4u would end it early: ‘A fundamental change to the relationship could give it the right to terminate the agreement. And why would it want to carry on adding to the profits of Carphone Warehouse?’
Phones 4u’s owners, BC Partners, have written down its residual stake in Phones 4u by more than 80%, following news of the Dixons-Carphone merger. Phones 4u’s CEO David Kassler also went public expressing his company’s ‘disappointment’ at the merger.
The source added: ‘It may be able to claim for losses and Carphone Warehouse has no incentive to support Phones 4u, putting it in a very difficult place. Kassler stating Phones 4u’s disappointment could be their first move to setting up a claim for losses.’
The deal has prompted renewed speculation that cash rich Vodafone may make an opportunistic swoop for Phones 4u, which is a strong Vodafone connector and has pulling power with high spending customers in their teens and twenties.
In retaliation Phones 4u is launching an assault on the mobile phone market from new directions. Kassler stated that there were ‘selected new retail partnerships’ available to Phones 4u ‘which will now be able to explore.’
Phones 4u is also ramping up its online drive, slashing the price of contract deals on its online business Dialaphone.co.uk. One online retailer said: ‘It has cut prices massively and the traffic has soared, particularly with their Samsung Galaxy 5 deals. I think that is part of Phone 4u's response to the merger.’
A Phones 4u spokesman said the company would not comment ‘on rumour and speculation.’
Dixons declined to comment on whether Phones 4u might end its contract early, but stated: ‘The contract with Phones 4u runs until May 2015, and Dixons will meet its obligations under that agreement.’