Dixons is off the hook in row with mobile networks

PHONES retailer Dixons Carphone has sealed a landmark agreement with mobile network operators over contracts it had described as ‘unsustainable’.

The deals had forced the Currys PC World and Carphone Warehouse group to meet strict sales targets to satisfy contracts signed with the telecoms giants years ago when sales were higher.

The group, which employs 42,000 people and has sales of £10.5billion, has struggled to meet the targets it agreed with firms such as EE, O2, Vodafone and Three as phones have become dearer and consumers have replaced them less frequently.

Dixons Carphone had faced strict penalties if it failed to hit contractual targets and had been forced into offering discounts to meet them. Chief executive Alex Baldock made solving the issue a priority when he took over a year ago with a vow to turn the business around. The row with the network providers echoed the failure of the relationship between Vodafone and Carphone Warehouse in 2006, subsequently rekindled in 2009, and the calamitous fallout between the networks and Phones4U.

The new terms for the contracts – understood to have been signed in the wake of the collapse of Phones4U in 2014 – avert a potential crisis and provide better access to a wider range of products from the networks, including SIM-only products.

Commissions from mobile networks account for about £1billion of revenues at Dixons Carphone.

Networks have complained that contracts sold through Carphone Warehouse are among the least profitable for them. But it remains a vital route to market as the biggest independent retail operator.

A mammoth £440million firsthalf loss announced in December laid bare the scale of Baldock’s task turning the business around amid intensifying competition.

The company’s share price has more than halved since Dixons Retail merged with Carphone Warehouse in 2014 – and this fall has prompted speculation it could be targeted by activist investor Elliott Advisors.

Baldock, who formerly ran the £2 billion home shopping giant Shop Direct, said he wants to make his stores ‘magnets for discovery’ for new technology and intends to focus on fast-growing markets such as online gaming.

Investors have taken heart from a rise in the company’s UK electricals sales at Christmas, boosted by super-sized TVs and gaming accessories, despite a slump in the mobile market. The group’s performance overseas in markets such as Sweden and Denmark outshone the UK, rising 5 per cent in the 10 weeks to January 5