O2 dumps Phones 4U

Mobile operator O2 UK has severed ties with high street store Phones 4U as a retailer of contract subscriptions.

As of April 1, Phones 4U will no longer sell contract subscriptions to the O2 network and will operate prepay sales at a lower level.

Existing Phones 4U customers on the O2 network will still use the retailer as their customer service and upgrades contact.

Speaking to telecoms.com, an O2 spokesman said that O2 was seeking to drive more business directly.

“The gross market [for new subscriptions] will be smaller this year and so we are increasing our focus on customer retention,” the spokesman said.

“This will give us more control over the end to end experience of the customer and will allow us to reinvest the costs of the subscriber acquisition back into the customer.”

O2’s move is indicative of something of a trend in the UK market. In October, Vodafone started the ball rolling when it pulled the plug on Carphone Warehouse as a retailer of contract subscriptions.

Perhaps ironically, Phones 4U won the contract as an exclusive third party retailer for Vodafone contracts. It seems the idea was to drive lower commissions from the retailers as well as streamline distribution costs.

Indeed, Orange talked tough the very next day about reviewing its own retail strategy but did not follow through with its threats, which may suggest Carphone offered the operator a better deal.

O2 will also be building on its acquisition of The Link, the mobile phone retail chain that O2 acquired in June for £30m. Post acquisition, O2 slimmed down its shop numbers but still has a retail presence of around 400 UK stores.