ORANGE is threatening to stop its contract sales in Carphone Warehouse just a day after Vodafone decided to axe the mobile phone retailer in favour of an exclusive deal with rival Phones4U.
The mobile phone operator said it was reviewing its "indirect sale strategy" as fears grew for the future of independent mobile retailers who could be forced to lower commissions as operators look to lower costs.
Orange admitted today it was cons
idering changes to its strategy with high street retailers, although it stressed a final decision had not yet been made.
A spokesman said: "Our relationship both with Carphone Warehouse and Phones4U remains unchanged. However, since our indirect distribution costs have gone up significantly over the last few years, we are in the process of reviewing our independent strategy for 2007."
But industry sources dismissed Orange's comments as provocative and said it had just signed a fresh deal with Carphone Warehouse. Vodafone announced yesterday its decision to sell its monthly contract mobile phones only through Phones4U from November 30.
Vodafone now sells two thirds of its products directly and struck the cheaper commissions deal with Phones4U as a way of lowering costs to offset falling voice prices.
The five UK mobile phone operators have all expanded direct sales in recent times by opening more own-branded stores and investing in internet and telesales functions. The move towards more direct sales also reflects the lack of guarantees that independent mobile phone retailers will recommend one specific operator's products over another.
Carphone Warehouse said it did not expect the loss of Vodafone to impact on market forecasts and would continue to sell Vodafone pay-as-you-go deals at its stores.
A spokesman said: "Carphone's business is based on the fundamental principle of impartial advice. This cannot and will not ever be compromised - it is the foundation on which customer trust and loyalty is built.
"We sell phones on the basis of what is right and best for our customers, not on the basis of guaranteeing volumes of sales for networks.
"Vodafone approached Carphone to enter into the same arrangement as they have announced with Phones4U. It would have meant guaranteeing to sell a high percentage of Vodafone subscriptions no matter how competitive the offer for customers."
Phones4U plans to open more than 60 new stores in the UK during the next eight months, increasing the number of outlets in the chain to 450.
The exclusive tie-up means Vodafone subscription phones will be available from fewer outlets, as Carphone boasts a chain of 700 UK stores.
Earlier this week, Carphone snapped up the UK arm of US broadband provider AOL for £370 million, becoming the third biggest supplier of broadband internet in Britain.
But the company also revealed in a trading update that it had incurred £70m in costs through its "free" broadband offer, which had attracted 625,000 customers since April.
The full article contains 498 words and appears in Edinburgh Evening News newspaper.
