Mobile giants reject Dixons’ calls for better terms
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.