Monday, October 23, 2006

Phones 4 U Exclusive Vodafone Deal

The annnouncement that Vodafone will be dealing exclusively with Phones 4 U seems like a bit of a funny one. The reason given - that Phones 4 U appeals to the younger market Vodafone craves - makes sense in a way, but I can't see any justification for NOT selling through as many outlets as possible. Also, the exclusive deal only applies to contract phones, which aren't really there for the younger market anyway.

Back in the day, Vodafone was the unquestioned king of UK mobile providers. Now, with the third generation licenses, reception issues with rivals are no longer relevant as they were and it's all about service and cost. I personally had difficulty with Voda when they worked with Singlepoint and in the months following their purchase of the company. I upgraded my phone and kept the same contract, but they knocked off my rolled-over free minutes and sent me a stinker of a bill. The problem was sorted reasonably quickly, but it shouldn't have been an issue in the first place and I did have to navigate through several layers of customer service advisor to get anything fixed.

While the Carphone Warehouse insists the announcement will do no great damage to profits (apparantly only 10% of their business involves Voda contracts), the BBC have reported that Carphone shares took a hammering in the aftermath of the announcement.

To me, it seems like a good time to pick up Carphone shares. Yes, they've taken a hammering and yes the Voda announcement is bad news (at least in the short term), but they have the most respected mobile communications brand out there (hence a royal warrant) and the Talk Talk internet project is in the process of revolutionising broadband, giving the company a huge client base to woo in the future.

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