Carphone suffers fresh mobile blow with loss of EE

EE loss follows O2 loss and standalone store closures

Dixons Carphone has suffered another blow to its mobile division after it announced that EE will not renew its contract with Carphone Warehouse.

The news marks the end of a 20-year-plus partnership between Carphone and EE (and its previous iterations), following months of negotiation.

It comes in the wake of Dixons’ failure to agree a new partnership with O2 earlier this year, as well as closing all of its 531 standalone retail stores.

Both parties have said that current EE customers through Carphone will not be affected by the change.

CCS Insight director of consumer and connectivity Kester Mann said the move was “no major surprise” as UK operators sought to “cut commission to third parties and build stronger relationships with their own customers,” amid slowing smartphone adoption and tightening margins.

Direct sales move

An EE spokesperson said: “After more than 20 years of close partnership, 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.

“This has not been an easy decision to take and follows many months of challenging discussions and negotiation.

“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.”

While a Dixons Carphone spokesperson added: “EE and Dixons Carphone have enjoyed a strong working relationship for over two decades. However, after lengthy discussions we have agreed that our contract with EE to sell pre- and post-pay will come to an end this month. Our financial plans for mobile and our support for customers currently on an EE connection are unaffected by today’s news.

“We are well underway 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. We will continue to provide our customers with a broad range of connectivity options through our own award winning MVNO iD Mobile, and partners Vodafone, Virgin Media and Voxi.”

Revenue concerns

Dixons’ mobile revenue for its 2019/2020 financial year saw a 20 per cent annual decrease to £1.589 billion. However, CEO Alex Baldock affirmed his commitment to the sector.

“Mobile remains a central category for us in the years ahead,” he said when discussing the results. “It’s the number one technology for customers and we want to be number one in customers’ eyes for tech, so mobile remains at the heart of that.”

However, Mann added that a turnaround was unlikely: “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.”