Vodafone Purge Continues

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Vodafone has continued its dramatic purge of the independent channel. Following on the heels of its termination of Carphone Warehouse’s retail contract in October, Vodafone last month cut Fone Logistics’ distribution contract.

This announcement supersedes an earlier statement in which Fone Logistics confirmed it had received a notice to terminate the distribution agreement from next February.

Julien Parven, Director Of Marketing for the distributor, said: “Fone Logistics is continuing to review its position with regard to Vodafone’s decision and no other comment will be made at this time.”

Fone Logistics had been an official Vodafone airtime distributor for nearly a decade. It was connecting up to 2,000 Vodafone contracts per month.

The move is part of a wider business review being conducted by Vodafone chief executive Nick Read, being put into action by Vodafone’s dealer channel heads Rob Sandford, Mark Bond, Kyle Whitehill and Amanda Baker.

Increasingly, it appears that Vodafone is forcing dealers to connect through Avenir and Anglia, which retain strong ties with its enterprise unit, as well as part-owned Manchester service provider Yes Telecom.

Dextra’s airtime division is the only distributor that has a deal with Vodafone’s consumer unit, on account of the volume of consumer connections it delivers, and remains unaffected.

Of the remaining distributors that connect through Vodafone’s enterprise unit, south coast distributor Hugh Symons appears to have been avoid being tarred by the same brush as parent company Carphone Warehouse and retains its contract for the time being at least. Last ditch efforts by Hugh Symons’ top brass, including managing director of indirect distribution Stuart Henry, appear to have saved it from the chop. But it is thought that Hugh Symons enjoys less good financial terms going forward, and is likely to be reviewed again early next year. Hugh Symons appears to have only a few months to prove its value to Vodafone.

Kent distributor Moco is also under close watch for the quality of business it delivers and is expected to lose its distribution contract in the New Year. Moco connects less than 400 customers per month via the independent channel and has been a Vodafone distributor for just one year.

By far the greater share of its business on Vodafone, and of most value to Vodafone, comes through its own Moco Business direct dealer sales. This will remain unaffected by the Vodafone channel review.

l Vodafone’s results for the six months to September 2006 were generally cheery for its shareholders. Said the company: “Despite the pressures from competition and regulation, Vodafone continues to execute the strategy laid out to shareholders in May and is on track to meet full year targets”.

Vodafone posted a 4.1% rise in operating revenues, although that headline conceals a number of issues. For a start, another impairment charge relating to its German and Italian operations actually forced the group into losses for the half-year. Revenues in its core European operations continued to decline – down 0.7% in the UK, but 3% lower in Germany and about the same in Italy. Spain bucked the trend with 15% increase in sales, but it’s the strong growth in developing markets (Eastern Europe, Middle East, Asia Pacific and Africa) that saw Vodafone to total revenues of £15.6bn.

The overall loss was £3.3bn, however, thanks to an accounting charge – principally a writedown on the value of goodwill in the group’s operations in Germany and Italy.

And subscriber numbers are picking up. In the UK, for instance, the group added 102,000 customers in Q2, nearly making up the 119,000 lost in the previous quarter.