Mo­bile gi­ants re­ject Dixons’ calls for bet­ter terms

The Sunday Telegraph - Money & Business - - Front page - By Christo­pher Wil­liams

AN AT­TEMPT by new Dixons Car­phone boss Alex Bal­dock to ex­tract more favourable terms from mo­bile op­er­a­tors has met firm re­sis­tance, threat­en­ing his pledge to im­prove re­turns on smart­phone con­tracts.

It is un­der­stood from mul­ti­ple sources that Voda­fone’s Bri­tish arm is fi­nal­is­ing a deal to con­tinue its relationship with Dixons Car­phone on sub­stan­tially the same terms for two more years. Although Voda­fone could have dropped the re­tailer en­tirely, Mr Bal­dock said along­side a ma­jor profit warn­ing in May that the re­tailer’s re­la­tion­ships with op­er­a­tors were “un­sus­tain­able” and in need of rene­go­ti­a­tion.

O2, Bri­tain’s largest op­er­a­tor, is not ne­go­ti­at­ing. The op­er­a­tor’s cur­rent deal has years left to run and sources said it saw no need to re­visit the dis­cus­sions.

Dixons Car­phone re­mains in talks with Bt-owned EE. Its dis­tri­bu­tion deal is due to ex­pire around the end of this year, but sources said progress to­wards a new agree­ment was slow. Mr Bal­dock has en­dured a rocky first few months as Dixons Car­phone chief ex­ec­u­tive af­ter he slashed fore­casts, closed dozens of stores and un­cov­ered a mas­sive per­sonal data breach. Dixons Car­phone had been un­fo­cused and un­der-in­vested, he claimed.

Mr Bal­dock said the prob­lems were “all fix­able”, start­ing with a more ag­gres­sive ap­proach to mo­bile phone op­er­a­tors.

He said “we won’t tol­er­ate” Dixons Car­phone’s weak per­for­mance and warned that “one way or an­other, this per­for­mance will im­prove in the medium term”.

His ap­proach has brought lim­ited suc­cess amid grow­ing dif­fer­ences be­tween the re­tailer and mo­bile op­er­a­tors over its im­por­tance in the mar­ket.

Con­sumers are in­creas­ingly sign­ing up to con­tracts di­rectly with op­er­a­tors on pack­ages that do not in­clude a smart­phone.

The trends were a ma­jor fac­tor in the col­lapse of Dixons Car­phone ri­val Phones 4u four years ago, as one by one the ma­jor op­er­a­tors pulled out to pre­serve their profit mar­gins.

Op­er­a­tors are re­shap­ing their own high street es­tates in line with the trends to fo­cus more on cus­tomer re­ten­tion, sell­ing ser­vices and pro­vid­ing tech­ni­cal help.

All par­ties de­clined to com­ment.

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