Dixons Carphone's bid to renegotiate mobile operator contracts falls on deaf ears

(Image credit: Dixons Carphone)

Dixons Carphone’s bid to negotiate more favourable contacts with mobile operators is failing, claims The Telegraph, threatening new CEO Alex Baldock’s recovery plan.

Carphone Warehouse is the UK’s biggest mobile phone retailer, but the market is saturating, and people are buying fewer phones. SIM-Only tariffs and SIM-free handsets are becoming increasingly popular and this is having an effect.  Margins are being squeezed and sales are flat.

Baldock assumed the top job earlier this year and made renegotiations as a pillar of his strategy, arguing that the terms of its deals with EE, O2 and Vodafone were “unsustainable” and signed in the wake of the collapse of Phones 4U.

Carphone Warehouse deals

All four major operators have invested significantly in their retail presences over the past few years and there is a suggestion that they might prefer to focus on their own channels because they are more profitable.

Meanwhile Three has no plans to return to Carphone Warehouse with CEO Dave Dyson telling TechRadar Pro that such a move wouldn’t make sense. And it appears as though its rivals have no intention of making life easy for Dixons Carphone.

According to the report, Vodafone is ready to sign a new two-year deal on roughly the same terms as before, while talks are ongoing with EE, whose deal expires at the end of 2018.

Meanwhile, TechRadar Pro understands O2’s contract still has years to run and that the operator is happy with the terms it had previously agreed.

In June annual profits fell from £500 million to £382 million, while the company expects profits to all again during the next 12 months. It will also shut 92 of its 700 Carphone Warehouse stores.

As well as renegotiated contracts, Baldock has also indicated his desire to overhaul the company with the increased use of data analytics, new technologies and better marketing.

Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.