Dixons Carphone's turnaround efforts suffered another blow after failing to reach a new deal with O2. The two companies had started negotiations for an extension over the past year, but failed to reach a mutually desirable outcome. O2 products and services will no longer be available in Carphone Warehouse stores or on its online platforms with immediate effect. Dixons Carphone CEO Alex Baldock has made renegotiating carrier contracts a cornerstone of his transformation agenda. Shortly after his appointment in 2018, he declared that existing relationships with EE, O2 and Vodafone were "unsustainable".
O2 Carphone Warehouse
It is understood that the retailer wanted to make significant changes to its partnership with O2, but the operator was happy to keep the terms of the existing deal. The door has been left open for a possible revamp in the future, but so far O2 is confident that investments in its own retail channels and partnerships with other independent retailers will put it in a good light. "After 20 years of negotiation, our current consumer contract with Dixon Carphone expired on March 31, 2020," an O2 spokesperson told TechRadar Pro. "Although we have worked hard over the past year to put a number of options on the table, it has not been possible to reach a new agreement, since they have made it clear to the market that they want to take a new strategic direction and change the relationship they had with mobile operators. Dixons Carphone is the UK's last mobile phone retailer, but it is struggling to keep up with changing consumer habits. A saturated market and longer upgrade cycles reduce contract renewal rates, making SIM-only rates and non-SIM phones more popular, reducing margins. In addition to "resetting" the company's relationships with operators, the company is enhancing its technological capabilities, training its staff and planning to offer credit services to revitalize its mobile business and boost sales. line To this end, it closes all 531 independent Carphone Warehouse stores in the UK on April 3. "As part of our strategy, we are moving towards a new, more flexible and transparent mobile offering that offers better value and better choice for our customers," a Dixons Carphone spokesperson said. “This offer is expected to launch later this year. Although our contract with O2 to sell postpaid services has ended, we continue to offer our customers a wide range of choices through our own mobile virtual network operator, iD Mobile, and our partners EE, Vodafone, Virgin Media and Voxi, including those who currently have an O2 connection. Dixons Carphone expects to break even by 2022, but industry watchers have described O2's withdrawal as a blow. "The loss of one of its biggest customers is a blow to Carphone Warehouse and now raises questions about the retailer's relationship with its other partners, including EE, Vodafone and Virgin Media," said Kester Mann, an analyst at CCS Insight. "The news comes just days after the embattled retailer announced it was closing all 531 stand-alone stores, a move that could not help negotiations with O2".