Henry calls for Unity and independence

A stony-eyed sphinx guarded the entrance to the main hall of Winchester’s Norton Park Hotel, casting its glare over the dark-rimmed eyes and gold-trimmed clothes of Hugh Symons’ top dealer fraternity last month. And the new-look management team at the Carphone Warehouse distributor delivered a steely message of hope and reassurance to dealers before the boozey finale.

It’s been a tough 12 months for Hugh Symons Communications. Carphone Warehouse’s acquisition of Hugh Symons in mid 2005 was hailed at the time as the final piece in Carphone distribution jigsaw, a move that would put it on an equal footing with the old Caudwell empire, and a transformative step for Hugh Symons from a family-run business to a king among distributors. But, Carphone’s personnel issues within its dealer arm aside, the distribution market has been squeezed in the past 18 months, and the retail sector has fared little better as the networks seize tighter control of their channels to market.

Resellers have suffered as acquisition costs have been stemmed and indirect partnerships have been purged. So it was with real interest 85 dealers and assorted trade press descended on Winchester for Hugh Symons’ latest Unity seminar at the end of April, its annual address and knees-up for its top-performing partners.

The networks were in attendance, with the well-noted exception of Vodafone, which pulled its airtime contract from Hugh Symons at the end of last year. The company’s business manager Bob Sweetlove was at the helm, one of the major constants in Hugh Symons’ recent history. The event also saw a public return to the trade floor for Stuart Henry, Carphone’s managing director of indirect distribution and Orange’s high profile former sales director. He was flanked by Mobile Phone Express (MPE) chief Phil Sambrook.

Henry was not prepared to dwell on the reign of his predecessor, Steve Fraser. “Steve was here, he’s no longer here, what he did or did not do doesn’t matter,” said Henry. “I don’t want to make any reference to him.”

Henry’s presence, indeed his appointment at Carphone in the first place, was important to Hugh Symons and, here, it provoked proper dialogue among attendees. Questions from the floor were and, in some cases, were not answered, but most felt there was more drive and realism in the messages that came from the Hugh Symons/Carphone/MPE triumvirate than had been present before. And before the belly dancers and snake charmers sparked the evening’s Egyptian-themed entertainment, they were keen to deliver an upbeat message. The point was that whatever the troubles with Vodafone and the implication was that Hugh Symons had suffered at Vodafone’s hands by its association with Carphone, better times are ahead.

Amidst all the tumult of the distribution sector, at least Hugh Symons’ dealers don’t face the prospect of it being sold from under their noses. Henry said that unlike other distribution businesses European Telecom, MoCo, Fone Logistics and Data Select are all up for sale, he said Hugh Symons’ future is assured. “Our commitment to dealers is long-term. We’re not going to be put up for sale, or disappear, or go bust. We’ve got the backing of the world’s largest retailer, which is committed to us and to our future. So we’re in a very strong position,” said Henry. Drawing on the old Orange slogan, then, the future is bright.

The business will be separated in the minds of the channel, and in its own central operations, from the Carphone behemoth. Merging, but standing alone Hugh Symons and Carphone handset distribution arm MPE will be merged fully this month. Handset sales will continue to run through MPE’s headquarters in Crewe, but data, marketing and commission reconciliation will be based at Hugh Symons’ base on the south coast. Henry said: “Carphone is a retail business and it has immense strengths. But it’s not very close to the distribution line. Distribution is a very different world, with very different requirements. This business will succeed by utilising the benefits that Carphone can bring to it, but by setting itself apart from Carphone at the same time. We need to stand on our own two feet and develop a business that has relationships with all the key suppliers and works in isolation [from Carphone]. That’s how it’s going to work. “John Caudwell would never have tried to run 20:20 out of Phones 4U. They were separate businesses that were, in most respects, competitors. At some stage, I think we should be competing with and supplying Carphone. But that’s well into the future.”

Henry went on: “We will never succeed if we’re [perceived to be] part of Carphone because it is a retailer, full-stop, end of story. If we make Hugh Symons a separate organisation, we will develop better relationships with networks and manufacturers, and we can look to offer a range of other products and services to our dealer base.” Top of the agenda for the airtime business is to be “match fit” so that it is in a position to serve Vodafone if Vodafone is ever inclined to bolster its indirect partnerships again. It has lost “some dealers” as a result of Vodafone’s exit, admitted Sweetlove, but it will be ready for Vodafone. “If we’re going to be the UK’s number one full service distributor, Vodafone would ideally be in our portfolio. We haven’t fallen out with Vodafone at all. It was as amicable [a separation] as it could be, and one day we’ll prove we can still do a job for Vodafone.” he said.

“There are dealers for whom it is inconvenient to have to open another account [with another distributor] in order to stock just one network. In some cases, they feel they have to go elsewhere, and in some cases perhaps Vodafone is losing sales because dealers are sticking to Hugh Symons because it’s a cleaner business.”

He added: “There is an ongoing dialogue with Vodafone. It has chosen to work with a very small number of distributors and I guess we will see how successful we are without it and how successful it is without us.”

For the dealers in attendance, the reaction was invariably in line with their network stock, but all naturally admitted a preference for Vodafone’s return to the Hugh Symons fold. Said one: “It’s had a major impact on us that Hugh Symons doesn’t work with Vodafone anymore. We do have other distributors but it’s a shame to have lost that relationship.”

Another dealer said: “We offer all networks so I’ve had to make new friends as far as Vodafone is concerned.”

“It would be nice to have Vodafone back. I can still connect Vodafone through Avenir but the commission is not so great. So it’s hard to compete, but we give the customer the option as a back up,” said another dealer.

The traditional, but growing, frustration among dealers at the networks’ trend for taking increased business direct and pricing the channel out of upgrade business did not find much encouragement here. Certainly, Hugh Symons’ plan to strike up and maintain supplier relationships, separately of Carphone, does not lend itself to confrontation with the networks about sales tactics on behalf of dealers.

Hugh Symons is not about to play network agitator, and is not ready to back idle dealer threats about a network boycott, or strike. Henry said: “It’s not a battle with the networks, though it is in danger of becoming one. The longer and harder we fight against the networks, the shorter the battle will be. We need to embrace what the networks are doing because they are the paymasters. Phil [Sambrook] can sell as many handsets as he wants but if Bob doesn’t get the networks on board to connect those handsets it’s dead stock.”

“So it is about making sure we work with manufacturers, networks and dealers to join the whole thing together. Otherwise we’ll have pockets of resistance and conflict, which we can’t afford.”

Secret tactics Henry was reluctant to give much more away on Hugh Symons’ tactics going forward. “The problem with telling journalists this stuff is it suddenly becomes public information. For it to work, we don’t need other people copying us.”

If Henry did not clearly outline Hugh Symons’ precise strategy, the message was clear: diversify or die; don’t fight the networks, get your ARPU up through data and increase customer lifetime value through contract upgrades. He said: “Suffice to say, the intention is to develop stronger network and manufacturer relationships than existed previously. And we will try to help out our dealer partners by offering them alternatives other products and services so they can expand beyond straight telecoms.”

“There are all sorts of pressures on dealers, and all kinds of threats out there. If we don’t work together, in a professional and committed manner, we won’t survive. But Hugh Symons expects its dealer base to fight for itself as well, and to engage its innate business sense to succeed in the market.”

Said Sambrook: “There has been significant overpopulation for a number of years so there is probably a natural level of retail estate that’s out there. A lot of people have jumped on a very easy bandwagon and have made a lot of money out of it. It’s easy to gain market share in a growing market. But only the good guys survive in tough markets. “Hugh Symons’ top band of customers the best quality dealers that will help to drive Hugh Symons forward are astute business people that would succeed in any market. These guys aren’t just selling mobiles, they’re selling accessories and landlines, and working on their billing platforms and diversifying into other areas.”