Network management Toolkit

Carphone Warehouse hits out at rivals

David Meyer ZDNet.co.uk

Published: 12 Oct 2006 17:40 BST

Carphone Warehouse responded to its plummeting share price on Thursday by engaging in an extraordinary war of words with Vodafone and its new high-street retail partner.

Vodafone announced on Thursday that it will stop offering its phones through Carphone Warehouse — which acquired AOL UK on Wednesday — instead opting for an exclusive arrangement with rival chain Phones 4u.

The move prompted several observers to speculate that Vodafone now viewed Carphone Warehouse as a rival operator rather than a sales channel. Carphone Warehouse operates the successful Talk Talk voice service, and Vodafone recently began selling a retail broadband product.

It also sent Carphone Warehouse's share price plummeting — down 14 percent on Thursday.

But late on Thursday Carphone Warehouse issued a statement claiming that Vodafone had approached it before approaching Phones 4u, looking for the same kind of exclusivity deal.

"It would have meant guaranteeing to sell a high percentage of Vodafone subscriptions no matter how competitive the offer was for customers," the Carphone Warehouse statement read, adding that "less than 10 percent of our subscription customers today choose Vodafone as their contract of choice".

"This is simply because 90 percent of customers feel they are getting a better deal from another network. It is a sad day for Phones 4u customers, to know that they are not being offered the best deal for them but instead the best deal for Phones 4u and Vodafone," the statement continued, adding: "Carphone Warehouse'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."

This was not the only heated exchange in which Carphone Warehouse was involved on Thursday.

Earlier in the day, Internet service provider Tiscali — which recently merged with phone and digital TV company Homechoice — issued a statement in which chief executive officer Mary Turner described the AOL UK purchase as "a tremendous window of opportunity for us as it will be a distraction for Carphone Warehouse, at least in the short term".

"In the end it will be stuck in the double-play arena and is well behind in the market despite this purchase. Voice-play and broadband is old news, we've moved on," Turner added.