Carphone Warehouse makes up with Vodafone

At least for existing customers

Posted in Mobile, 6th December 2006 17:13 GMT

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Just a couple of months after Vodafone announced that Phones4U would get the exclusive right to sell its connections it has back-peddled and will allow CW to sell contract renewals and pre-pay connections.

According to the The Financial Times the firms have stepped back from an acrimonious divorce, and have opted for some sort of open relationship. The Times estimates contract renewals and pre-pay connectionsto account for around 40 per cent of the business lost, which makes it a significant step towards rebuilding the relationship between the two companies.

At the time of the original announcement Carphone Warehouse shares dived nearly 16 per cent as many questioned its business model, and other networks announced they were re-examining their sales channels. But it would appear that other operators have become nervous of doing business with Phones4U, and are strengthening their relationship with CW as a result, which in turn makes it harder for Vodafone to operate an exclusive arrangement.

It isn’t rare, in the mobile industry, for companies to struggle to understand who needs whom the most, and who has the upper hand in negotiations.

Network operators are often guilty of over-rating their position while rapidly discovering that customers are more loyal to their handset manufacturer or retailer than their service provider, a situation which is only going to intensify as alternative voice services become more widely used.

This time it seems that Vodafone overstepped the mark, and in a year or two we’ll see Carphone Warehouse quietly stocking Vodafone contracts again as though nothing had happened.®

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