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Is Vodafone funding selected takeovers to protect its base?

Paul Withers
September 24, 2012

Industry sources suspect network of giving financial assistance to chosen partners

Vodafone is understood to be funding dealer acquisitions to ensure customers are signed to trusted partners who won’t churn the base to rival networks.

Vodafone declined to comment on whether it was funding dealer acquisitions.

Newly-created company PMGC Technology acquired Vodafone platinum partners Premier Mobile and Phonebox Communications in April.

Sources claimed Vodafone loaned PMGC £1.74 million towards the acquisition – around 50 per cent of the deal’s total sum of £3.4 million.

It is understood £300,000 was invested by PMGC Technology finance director Shez Cheema, with the remainder of the acquisition coming from “internal funding”.

Mobile News’s source revealed Vodafone part-funded the deal, but had to gain clearance from its other European operations before it was eventually signed off in Belgium.

PMGC was formed by Premier Mobile MD Jason Yeomans (pictured) on March 2. The acquisition of Solihull-based Phonebox was completed shortly afterwards.

Yeomans held a 30 per cent stake in Premier Mobile. He purchased the remaining 70 per cent of Premier from director Alan O’Brien as part of a management buyout.

Yeomans denied Vodafone had contributed any of the funding in his purchase.

“We’re a strategic partner of Vodafone but it would never fund the acquisition of another business,” he said. “What Vodafone does do is support the development of businesses.

“The support we have from Vodafone as a strategic partner is the same as what its other partners are receiving.

“Vodafone measures partners by ambition, ability and alignment. We’ve been aligned with Vodafone for a long time because that’s the way business has to go in this sector.”

The deal marked the first time two Vodafone platinum partners had formed one organisation.

£10m revenues
Its creation saw PMGC Technology become the UK’s second largest mobile dealer with a customer base of more than 54,000 connections. Of these 43,000 were on Vodafone. Combined annual revenues were in excess of £10 million.

Further sources said Vodafone was funding acquisitions to ensure its customer base would be transferred to a top-performing partner it could trust, eliminating the possibility of churn to another network.

One told Mobile News: “Vodafone is funding a lot of dealer acquisitions. It aligned with certain partners. It’s a safety net for it to ensure its partners are keeping a large chunk of their customer base. There’s a logic to having an agreement with a trusted partner.

“This strategy was obvious in the acquisition of Phonebox  because it was managing around 27,000 connections which would have been at risk in the hands of the wrong partner.

“Some dealers seem to be trying to exit mobile. If they do, Vodafone would want their base to be where they can control it.”

Another said: “When Vodafone hears that a company is up for sale, it tries to steer the selling party towards a buyer of its choice.

“Vodafone has allowed some dealers to get too big for their boots and would rather move a base to that big player it trusts.

“It is ensuring its customers base is safe with a trusted partner that it has faith in, rather than being sold to a dealer that might put that base at risk through churn to other networks.”

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