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BT takes £149m hit to hang up Carphone Warehouse deal

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Carphone Warehouse staff in Huntingdon open their doors
Carphone Warehouse staff in Huntingdon open their doors

BT has taken a £149m hit after ending a two-decade old relationship with electricals retailer Dixons Carphone.

A disclosure in the telecoms operator’s annual report revealed the cost of the settlement after it chose to end a contract between EE, its mobile division, and Carphone Warehouse last September.

BT said it had resolved all outstanding matters with the retailer, including “revenue share costs that could have previously been recognised over future years”.

The £149m settlement cost consisted of a cash payment made in April and writing off balance sheet prepayments.

BT said at the time it had decided to focus on selling EE services online or through its own 575 stores following months of “challenging discussions and negotiations”.

The company’s decision to end the agreement came after O2 severed ties with Carphone Warehouse last year.

Tensions between mobile network operators and Dixons Carphone intensified three years ago when chief executive Alex Baldock pushed to renegotiate “unsustainable” contracts.

Carphone Warehouse and Currys PC World were being hit with financial penalties because they could no longer reach stringent sales targets agreed with operators when they were selling more mobile phones.

The electricals retailer earns a commission for each customer it signs up to a mobile network.

Carphone Warehouse has been a waning force in EE’s distribution in recent years, dropping more than 50pc to account for less than 15pc of new customers and upgrades.

The brand, which was founded by Sir Charles Dunstone and Julian Brownlie in 1989, is set to disappear from the high street after Dixons Carphone said it would change the name of all its shops to Currys.

Dixons Carphone closed 531 Carphone Warehouse stores last year as it shifted towards selling mobile phones online and through its 305 Currys PC World stores.

In May, BT recorded a 7pc fall in revenue to £21.3bn for the year to March in response to the pandemic-induced pressure on its consumer and business arms.

Pre-tax profits also fell 23pc to £1.8bn.

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