Brit mobile network EE follows O2 by ending trading relations with retailer Dixons Carphone

'It’s hard to see how Carphone can turn around its mobile business'

BT is ditching a two-decade trading agreement with Dixons Carphone in preference of selling services via its own network of high street stores, months after O2 called time on its contract with the retailer.

"We have taken the hard decision to not renew our EE Mobile contract with Dixons Carphone, and shift our focus and investment to growth in our own stores and online channels," BT said in a statement.

This determination came after "many months of challenging discussions and negotiations," the telco added.

"However as our strategy moves toward convergence and our focus on customer value and retention increases, we will be resetting our distribution strategy to prioritise sales and service in our own channels."

No customers will be "affected by this change," BT claimed.

Back in March, Telefónica-owned O2 ended its agreement with Dixons Carphone, with that cessation understood to be related to the retailer's decision to shutter all 531 of its own standalone Carphone stores.

The exit of EE Mobile from the Currys' owners outlets means that out of the so-called big four telcos in Britain, only Vodafone has a reseller agreement with Dixons. Three ended its airtime contract with Dixons back in 2013.

So what's causing the latest upheaval? Even before COVID-19 hit, customers were hanging onto smartphones for longer, and buying phones separate to connectivity or as part of a more flexible bundles. This is a trend which has become more pronounced, and has put pressure on Dixons' sales motion, forcing it to rethink the business and renegotiate agreements with telcos.

'The Group will ... no longer be encumbered by historic sales volume targets'

CEO Alex Baldock, who inherited the problem from Seb James, has reworked things to try to make the loss-making Mobile unit economically viable, though COVID-19 delayed the time frame for the business unit to break even to fiscal '22.

Sales in Mobile plunged by a fifth in Dixons Carphone's financial year ended 2 May to £1.589bn and it reported a loss before tax of £104m.

Dixons said in July when those financials were filed that it had parted with O2 in March, renegotiated all legacy network contracts, and the remaining vendors would "substantially roll off" during the current financial year.

"As a result, the Group will then no longer be encumbered by historic sales volume targets," it said.

Attempts to transform the Mobile business are among wider initiatives across the group to improve online sales, provide more credit services, make it easier for customers to shop at Dix Car, both in its stores and via its web shops.


Dixons Carphone smarting from £440m loss as it writes down goodwill on mobile biz


According to a trading update last week, Dixons said revenue at the Mobile business had fallen 56 per cent year-on-year in the 12 weeks to 29 August.

In a statement about the EE deal, Dixons said that after "lengthy discussions we have agreed that our contract with EE to sell pre-and post-pay will come to an end this month."

It continued: "Our financial plans for mobile and our support for customers currently on an EE connection are unaffected... We are well under way with our strategy of moving to a new, more flexible and transparent mobile offer that gives better value to our customers, and this offer is set to launch early next year."

This means Dixons Carphone now has contracts for airtime in place with Vodafone, (Voda MVNO) Voxi and Virgin Media.

Ben Stanton, senior analyst at Canalys, told us it is "not clear how Dixons will reincarnate" its mobile biz, "but the slowing rate of customer tariff refresh has applied unwelcome pressure in recent years."

He added: "For me, the news is particularly interesting in the wake of the closure of standalone Carphone Warehouse stores. As Carphone moves to a shop-in-shop inside of Currys PCWorld, it is actually moving to a very different type of retail environment, it will be more frequently found in a big retail park, and less so in a city centre. So it removes a key competitive angle in smaller high-street locations, where the network operator stores are all located. So suddenly, Dixons has a little less leverage over the operators than it used to."

Striking a rather more fatalistic tone, Kester Mann, director of consumer and connectivity at CCS Insight, said Dixons Carphone has been "caught in the crossfire of dwindling sales of mobile phones and high-street apathy."

He concluded: "With the recent loss of two of its largest customers, it's hard to see how Carphone can turn around its mobile business in a market now far more orientated toward retention than acquisition." ®

Similar topics

Other stories you might like

  • Verizon: Ransomware sees biggest jump in five years
    We're only here for DBIRs

    The cybersecurity landscape continues to expand and evolve rapidly, fueled in large part by the cat-and-mouse game between miscreants trying to get into corporate IT environments and those hired by enterprises and security vendors to keep them out.

    Despite all that, Verizon's annual security breach report is again showing that there are constants in the field, including that ransomware continues to be a fast-growing threat and that the "human element" still plays a central role in most security breaches, whether it's through social engineering, bad decisions, or similar.

    According to the US carrier's 2022 Data Breach Investigations Report (DBIR) released this week [PDF], ransomware accounted for 25 percent of the observed security incidents that occurred between November 1, 2020, and October 31, 2021, and was present in 70 percent of all malware infections. Ransomware outbreaks increased 13 percent year-over-year, a larger increase than the previous five years combined.

    Continue reading
  • Slack-for-engineers Mattermost on open source and data sovereignty
    Control and access are becoming a hot button for orgs

    Interview "It's our data, it's our intellectual property. Being able to migrate it out those systems is near impossible... It was a real frustration for us."

    These were the words of communication and collaboration platform Mattermost's founder and CTO, Corey Hulen, speaking to The Register about open source, sovereignty and audio bridges.

    "Some of the history of Mattermost is exactly that problem," says Hulen of the issue of closed source software. "We were using proprietary tools – we were not a collaboration platform before, we were a games company before – [and] we were extremely frustrated because we couldn't get our intellectual property out of those systems..."

    Continue reading
  • UK government having hard time complying with its own IR35 tax rules
    This shouldn't come as much of a surprise if you've been reading the headlines at all

    Government departments are guilty of high levels of non-compliance with the UK's off-payroll tax regime, according to a report by MPs.

    Difficulties meeting the IR35 rules, which apply to many IT contractors, in central government reflect poor implementation by Her Majesty's Revenue & Customs (HMRC) and other government bodies, the Public Accounts Committee (PAC) said.

    "Central government is spending hundreds of millions of pounds to cover tax owed for individuals wrongly assessed as self-employed. Government departments and agencies owed, or expected to owe, HMRC £263 million in 2020–21 due to incorrect administration of the rules," the report said.

    Continue reading
  • Internet went offline in Pakistan as protestors marched for ousted prime minister
    Two hour outage 'consistent with an intentional disruption to service' said NetBlocks

    Internet interruption-watcher NetBlocks has reported internet outages across Pakistan on Wednesday, perhaps timed to coincide with large public protests over the ousting of Prime Minister Imran Khan.

    The watchdog organisation asserted that outages started after 5:00PM and lasted for about two hours. NetBlocks referred to them as “consistent with an intentional disruption to service.”

    Continue reading
  • Suspected phishing email crime boss cuffed in Nigeria
    Interpol, cops swoop with intel from cybersecurity bods

    Interpol and cops in Africa have arrested a Nigerian man suspected of running a multi-continent cybercrime ring that specialized in phishing emails targeting businesses.

    His alleged operation was responsible for so-called business email compromise (BEC), a mix of fraud and social engineering in which staff at targeted companies are hoodwinked into, for example, wiring funds to scammers or sending out sensitive information. This can be done by sending messages that impersonate executives or suppliers, with instructions on where to send payments or data, sometimes by breaking into an employee's work email account to do so.

    The 37-year-old's detention is part of a year-long, counter-BEC initiative code-named Operation Delilah that involved international law enforcement, and started with intelligence from cybersecurity companies Group-IB, Palo Alto Networks Unit 42, and Trend Micro.

    Continue reading

Biting the hand that feeds IT © 1998–2022