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Vodafone terminates Fone Solutions

Mobile News
July 20, 2010

Major B2B dealer Fone Solutions loses 5,500 customers and £500,000 in ongoing revenue as Vodafone axes its airtime account after key shareholders bail out

Vodafone terminated its agreement with B2B dealer Fone Solutions yesterday (July 19) after fears the firm could be liquidated as a result of a number of shareholders withdrawing their investment.

Fone Solutions, which claims more than 300 Vodafone “significant accounts” and over 5,500 Vodafone connections, was informed of the decision yesterday by Vodafone subsidiary Yes Telecom, and also that management of its customer base is being re-distributed among rival dealerships.

Mobile News understands Fone Solutions’ Vodafone customers are now being managed by other key Vodafone dealers, including Phonebox Solutions, Wish Communications, Olive Communications and Pure Communications.

A Vodafone spokesperson said: “Yes Telecom has taken the decision to end its partnership with Fone Solutions. Yes Telecom will look to secure as many of its Vodafone customers with other key partners to avoid minimum disruption to their service.

“Yes and Vodafone are committed to working closely with all of their indirect partners.”

Vodafone instructed Fone Solutions’ customers on Friday (July 16) it was terminating its dealer code and would transfer their account management to other dealers.

Fone Solutions managing director Nick Underwood-Lea, who set up the company in 2006, said he had alerted Vodafone two weeks ago to the withdrawal of key investors from the company, and had discussed with Vodafone ways to find a solution for all parties.

Underwood-Lea said he was “stunned” by Vodafone’s treatment, and accused it of “destroying a four-year business relationship” swiftly and without consultation, informing Fone Solutions customers before the company itself.

Underwood Lea acknowledged the company is in a “black hole” as a result of the withdrawal of investors and its main network supplier. He said the firm will continue to manage its remaining 5,000 connections on Orange and O2, and churn customers it has lost with Vodafone’s exit to these other airtime suppliers.

Fone Solutions loses £500,000 ongoing revenue from Vodafone with the transferral of its base.

Underwood-Lea said: “We had some internal shareholder issues, which have caused us some problems. Shareholders wanted to pull out and wanted settlement more quickly than we could manage, which put us in a corner. It has left us in a black hole and we are working with our advisors to get this resolved.

“We tried to work with Vodafone to come to a solution. Vodafone kept telling us its legal team was dealing with the matter, only to discover yesterday they had reallocated all our customers to other partners.

“Vodafone told us at 2.10pm on Monday, having informed our customers on Friday. We had spent four years building that base with Vodafone, and have some very loyal customers who will only ever deal with us. It has left that in tatters; it has destroyed four years of hard work in 10 minutes.

“We are now in negotiations with other networks, because we are doing more than 250 new connections per month.”

Fone Solutions, with support from Vodafone, recently merged with smaller dealers across the UK to build its position in the dealer market.

The firm told Mobile News recently it aimed to be the biggest connector of Vodafone business in the UK by the end of 2010, and had opened a new call centre (now suspended) to support the ambition.

The dealers it merged with, Liverpool-based Corporate Mobile Solutions and Base Communications, are expected to revert back to their original trading identities. Both were predominantly Orange connectors.

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