Phone House pulls the plug

HIGH Street mobile phone supplier Phone House, part of the UK’s Carphone Warehouse group, is to pull out of the French market over the next 12 months – but is in talks with potential buyers to take over parts of the business.

The company – which has up to 1,200 staff in France - said that its economic model, which was based on commissions from telecoms companies for customers signing up to contracts and low-cost new phones, was “no longer viable”.

France Télécom Orange put the final nail in the coffin after refusing to renew its contract with the company – which made up 52% of its business. Bouygues Télécom had already halted its contract, which had been 12% of its trade.

Carphone Warehouse spokesman Shane Conway said the company will “ensure customers’ warranties are honoured”.

Phone House had said last year that about 50 stores would close with the loss of 246 jobs as a first part of its strategic review and the new decision comes at the end of the review. It is talking to potential buyers on store disposals and said it wanted to “minimise the loss of jobs”.

Business website Capital.fr said the Phone House business model worked well when the mobile phone market was expanding several years ago and there were millions of customers looking for phones. However, now everyone has a mobile and telecoms companies were looking to retain the customers they had.

The arrival of low-cost operator Free Mobile had accelerated the trend, with Phone House seeing a 20% drop in contracts signed and a 2-30% drop in commissions.