Vodafone is to terminate its network agreement with Phones 4u in February next year. The decision follows a major review of Vodafone's distribution strategy, which will also see it strengthen its distribution partnetrship with Dixons Carphone.
The move will come as a major blow to Phones 4u, which has also been hit by the loss of its concessions business with Dixons following the recent merger of the electronics giant with Carphone Warehouse. It also leaves the mobile retailer with just EE as a network partner.
Phones 4u said it was holding talks with other networks to replace the business it had with Vodafone though there was 'no certainty' as to the outcome, according to a statement.
Bonds in the company fell today on the back of the news. The deal with Vodafone represented sales of about £212m and earnings of £18.5m before interest, tax, depreciation and amortisation during the past 12 months.
Phones 4u said it was ‘both surprised and disappointed’ with Vodafone’s decision not to renew the contract.
In a statement the company said: 'Until February 2015 we will continue to trade as usual with Vodafone. Following that date, we will continue to trade on our existing network brands including EE, T-Mobile, Orange, Virgin Mobile and our own network, LIFE Mobile. In addition to this we are in active discussions with existing partners, other networks and third party MVNO’s to seek to reallocate the Vodafone volume.
David Kassler, Phones 4u CEO, remained defiant in the face of Vodafone's decision, insisting the company was still in a strong trading position in the market. He said: 'Although we are disappointed with the decision by Vodafone, Phones 4u continues to trade well in the market. We have high levels of market share, especially in the youth segment, and our own network LIFE Mobile (which was launched in 2013) is now fully road-tested and enjoying a great first year with customer growth ahead of our expectations.
'We are continuing to set new benchmarks as the leading independent retailer of 4G, with over 70% of connections on this superfast standard. Both transactions and search traffic through our new mobile commerce site are growing rapidly as customers increasingly look to begin their purchase journey online, and they are continuing to choose to shop with Phones 4u because of the great service and value they get across all channels. The independent researcher, YouGov, rated Phones 4u as #1 for iPhone buying experience, which is perfect preparation for the Apple announcements expected this month.
A spokesman from Vodafone said: 'Earlier this year Vodafone UK said it was reviewing its distribution strategies in the UK and that it would be opening a further 150 stores and creating 1,400 new jobs. As part of that review, Vodafone today confirms that it will be enhancing its distribution partnership with Dixons Carphone from early next year and will not be extending its existing contract with Phones 4u, which expires in February 2015. We will continue to work with a range of other indirect partners, who represent an important part of our business mix.'