Dixons-Carphone deal under threat from EE

UK’s largest MNO in threat to drop UK disties

The proposed merger between the white goods specialist – the Dixons Group (which includes PC World) and UK High Street mobile phone distributor, Carphone Warehouse, could be under threat from EE. Not a good prospect given that EE is the UK’s largest MNO [Mobile Network Operator] – made up as it is from Orange and T-Mobile. A story in the Sunday Telegraph here, claims the MNO might be considering cutting ties with the Carphone Warehouse or with its arch rival distie [distributor] Phones4U – or cutting ties with both.

The UK newspaper quotes Gervais Pellissier, deputy CEO of France’s Orange as urging EE to “get rid” of third party retailers.

The logic behind this is obvious – MNOs across Europe are finding their margins being increasingly squeezed by EU legislation (Threatened or enacted) which is badly affecting their revenues.

Hence the desire to cut out the middleman by closing links with the disties and deal direct with consumers.

One way of doing so is for MNOs to increase the number of High Street stores.

After the merger of orange and T-Mobile to make EE, a number of superfluous stores were shut but EE is still reportedly interested in opening a further 50 in areas where it has no major presence.

GoMo News suspects, however, is that another motivation for going direct is the fact that EE’s own stores are probably better equipped to sell the virtues of  its 4G network to consumers.

By contrast, disties tend to present to the consumer the best deals they can offer at the time.

The loss of EE would mean Carphone losing its biggest MNO customer and make it less inviting as a partner to Dixons.

See also … ‘Brits won’t buy a connected fridge from Dixons Carphone‘.

About Dave Evans

Dave Evans was a long established commentator on both the IT and cellular industries. His last focus was on share price trends within the sector. He passed away in September [2014].
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