Carphone Warehouse

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Carphone Warehouse Group plc
Type Public limited company
Traded as LSECPW
Industry Telecommunications
Founded 1989
Founder(s) Charles Dunstone
Headquarters North Acton, London, United Kingdom
Key people Sir Charles Dunstone (Chairman)
Andrew Harrison (CEO)
Products Home and Mobile telephone
equipment and services
Revenue £10.7 million (2013)[1]
Operating income £57.1 million (2013)[1]
Net income £4.2 million (2013)[1]
Subsidiaries Best Buy Europe (joint venture with Best Buy)
Virgin Mobile France (47% holding)
Website cpwplc.com

Carphone Warehouse Group, known as Carphone Warehouse, is an independent mobile phone retailer, with over 1,700 stores across Europe. It is based in the United Kingdom which includes all Carphone Warehouse stores. Outside Ireland and the United Kingdom, the company trades as Phone House. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. In May 2014 Carphone Warehouse and Dixons Retail announced their merger to create Dixons Carphone.

History[edit]

The company was co-founded in 1989, when most portable phones were too bulky to carry and called car phones, by current Chairman Sir Charles Dunstone and Julian Brownlie. Brownlie and Dunstone put £6,000 into the company from their savings. In 1990 Dunstone then called his old school friend and Chartered Accountant David Ross,[2] who agreed to become Finance Director. Based originally in Dunstone's rented flat on the Marylebone Road, London, four years later the company had grown to 20 stores.

While Dunstone became the public face of the Carphone Warehouse, David Ross (described by Dunstone as his "secret weapon"),[3] developed and drove the high street retail footprint of the company by buying Tandy in the UK. Dunstone approached old customer Guy Johnson of NEC UK – later described by one City analyst as "the Ringo Starr of Carphone Warehouse" for being in the right place at the right time[4] – to become the third partner, later taking up the role of Logistics and Distribution director.[5]

David Ross led the footprint development of the company, under The Phone House brand, across Europe and the United States.[6] When David Ross led the IPO of Carphone Warehouse in 2000, it had been so successful that the partners had not needed to borrow or involve outsiders: Charles Dunstone owned half, David Ross a third, and Johnson most of the rest.[7]

Only Johnson of the three partners had a family, and having according to media reports becoming less enamoured by the David Ross-led European expansion of the organisation,[6] sold the majority of his stake in 2001 and retired with his young family to his holiday home in Portugal.[5]

While David Ross had been joint-Chief Operating Officer with Charles Dunstone from 1990 and 2003, whereas Dunstone stayed with the business that he still runs today, Ross started to give up his executive position from 2003.[7] Ross became deputy chairman in July 2005,[8] and by 2008 was a non-executive director. David Ross resigned from the board in December 2008 over an issue with shares.[9]

The group split in March 2010, with TalkTalk and New Carphone Warehouse becoming publicly listed companies. Charles Dunstone became Chairman of both companies. New Carphone Warehouse holds a 50% stake in Best Buy Europe and a 47.5% share in Virgin Mobile France. Dido Harding became CEO of TalkTalk and Roger Taylor CEO of New Carphone Warehouse.[10]

Timeline[edit]

Year Month Event
1989 The Carphone Warehouse launched
1994 Carphone Warehouse Insurance launched
1996 First Phone House stores open outside of the UK, in Paris and Dublin
1999 January Acquisition of Tandy (UK only) for £9m[11]
2000 July IPO on main market of London Stock Exchange at a price of GBP£2.00 per share
2001 June Acquisition of Cellcom for £9.1m[12]
2002 Acquired Opal Telecom
2003 TalkTalk brand launched
2004 January Acquisition of e2save for £4.7m[13]
March Acquisition of Xtra in Spain for £11.6m[13]
November TalkTalk Broadband launched
2005 March Acquisition of OneStopPhoneShop for £15m[14]
December Acquisition of Tele2 UK for £11.5m[14]
Acquisition of One.Tel for £169.6m[14]
2006 April "Free" TalkTalk broadband offer launched[15]
October Acquisition of the access business of AOL UK for £370m[16]
Vodafone switches its contract business to Phones 4u[17]
November Launch of a MVNO in Spain under the brand "Happy Móvil"
2007 January Suspension of the Big Brother sponsorship deal.
May Roll out of Geek Squad nationwide.
June Three-year £7 million X Factor sponsorship deal signed.[18]
July Carphone Warehouse offers free laptop with AOL Broadband (counter-offer of PC World's free laptop with Orange Broadband deal).
September The Carphone Warehouse joins the FTSE100
2008 May Carphone announces £1.1bn takeover by Best Buy
2010 March Carphone and TalkTalk Group split to create two separate publicly listed companies

Divisions[edit]

CPW Europe[edit]

The retail business operates under the Carphone Warehouse brand

In May 2008 Best Buy agreed to buy a 50% share of The Carphone Warehouse retail business for £1.1 billion to launch the Best Buy Europe joint venture.[19] Best Buy branded superstores opened in the UK on April 30, 2010 with a store in Thurrock, Essex. In total, 11 stores were opened. The company closed all of its UK stores on 14 January 2012, due to poor financial results.

The division was renamed CPW Europe, and includes all stores operating under the Carphone Warehouse and Phone House brands.[20]

Geek Squad[edit]

In October 2006 it was announced that Geek Squad would be launching in the UK in a 50/50 joint venture between Carphone Warehouse and Best Buy.[21]

Geek Squad currently offers 24 hour nationwide over-the-phone technology support.

In 2008 the Carphone Warehouse is increasing its joint venture with Best Buy by launching Best Buy Mobile as a "store inside a store" inside of Best Buy's or as a separate store located by Best Buy stores throughout the United States. The labor will be split between the two companies. In the same business venture Carphone Warehouse was split into four parts (half retail and half broadband) and one quarter sold to Best Buy for a sum nearing 1.1 billion.[22]

Mobile phone e-tailers[edit]

Mobile phone e-tailers e2save (OneStopPhoneShop and The Phone Spot) and Mobiles.co.uk are separately managed divisions within Carphone Warehouse.

Marketing campaigns[edit]

In the 1990s Carphone Warehouse became well known for using the Stereo MCs' "Connected" in its advertisements. Mowbli, the little mobile phone, was Carphone Warehouse's mascot. He appeared mainly in radio advertisements with his friend Ed (voiced by the Irish comedian Ed Byrne), and also on television advertisements. Mowbli was dropped in 2008 and replaced by hand drawn characters and a hand drawn logo to "Bring back its image of Simple Impartial Advice". The retailer returned to the old strapline 'Simple, Impartial Advice'. This reflects the businesses foray into wireless products including laptops, netbooks and games consoles[how?].

The X Factor[edit]

On 19 June 2007, the Carphone Warehouse became the official sponsor of the fourth series of The X Factor. The sponsorship deal was to last for three years. The Carphone Warehouse also became the sponsor of its spin-off show, The Xtra Factor. After the Carphone Warehouse and TalkTalk split, TalkTalk took over the sole sponsorship of The X Factor.[23]

Big Brother[edit]

The company were the sponsors for the UK's version of Big Brother from 2004 to 2007. In 2006 they also sponsored Celebrity Big Brother and related Celebrity Big Brother shows on Channel 4. On 17 January 2007, in response to alleged racism in Celebrity Big Brother, Charles Dunstone said: "We are talking to Channel 4. The sponsorship is constantly under review. Clearly we are against racism. Most people understand that the person who has their name associated with the programme does not necessarily condone the content.[24][25] On 18 January 2007, Carphone Warehouse announced that it had suspended its sponsorship of the show as Channel 4 had not taken sufficient action in response to the alleged racism in the show.[26] On 8 March 2007, the company permanently dropped its sponsorship of the show.[27]

Appys Awards[edit]

In April 2011, Carphone Warehouse sponsored the Appy Awards, calling them "the UK’s first major app awards ceremony designed to recognise innovation and development in app technology".[28]

Charity support[edit]

In 2001, Carphone Warehouse established a corporate partnership with Get Connected UK that continues today. Carphone Warehouse supplies Get Connected with office and helpline equipment and it has been instrumental in ensuring it is free to call from all landlines and mobiles.[29] This partnership won the Charity Times Corporate Partnership Award in 2003 and the Third Sector Excellence Award for Corporate Partnership in 2006.[30]

Mergers and acquisitions[edit]

AOL UK[edit]

The Carphone Warehouse announced that it would purchase the UK business of AOL on 10 October 2006 for £370m.[16][31][32] This makes Carphone Warehouse the 3rd largest broadband provider, with over 2 million customers, and the largest LLU Operator with more than 150,000 LLU customers.[33][34] The acquisition process completed on 9 December 2006. A press release stated [16] that AOL UK Audience business will remain a separate organization and brand with a revenue sharing agreement. The AOL UK Access business (broadband) was changed to AOL Broadband. AOL began consulting on job cuts in 2006. The Times reported that the company expected to cut a total of 500 UK jobs by Christmas.[35] In line with legal requirements, AOL UK (now AOL Broadband) notified the DTI that redundancies are planned. The Press Gazette stated "The company has informed the DTI that it is possible that it will make more than 100 redundancies".[36]

On 1 November 2006, it was made public that Karen Thompson, AOL UK CEO and President AOL Europe, had resigned and had been succeeded by Carlo d'Asaro Biondo (previously CEO of AOL France). Thompson was part of the team responsible for launching AOL UK in 1996.[37]

It was made public on 14 December 2006 that Carlo d'Asaro Biondo had resigned after only six weeks in his new role. Philip Rowley (the chairman of AOL Europe) has taken over on a temporary basis. The Guardian states: the management turmoil has put the European operation in "freefall" and created a "massive vacuum", according to one AOL insider. The same article estimates that 5,000 AOL jobs are to go worldwide (25% of staff) with a significant number from AOL UK.[38]

In January 2007 AOL UK was rebranded as AOL Broadband.

In an early press statement, The Carphone Warehouse stated they had "no plans to change the service in any way at all," but, since January, all those who used P2P applications heavily had their downstream bandwidth limited to 50 kbit/s during peak times (18:00–24:00, Sunday to Thursday).[39]

During the third quarter of 2007, AOL Broadband caused a stir by offering a free laptop computer (and eventually a free PlayStation 3) to all new customers signing up for a 24 month contract with its AOL Broadband Wireless Plus broadband package. While sceptics looked for a catch, industry experts conceded[40] that the offer was reasonable, despite the necessity to sign up to an AOL Talk home phone package in order to be eligible for the free laptop. While an option to not take a bundled home phone package was available, the price increased by £10; further offers include a free Xbox 360, PlayStation 3 and Wii in addition to other promotional items.

Best Buy[edit]

On 8 May 2008, Charles Dunstone revealed Carphone Warehouse's biggest move to date: a £1.1bn takeover by America's largest electrical retailer, Best Buy.[41] The deal has paved the way for Carphone to split its telecom and retail businesses: a move expected to be completed by March 2010. As part of the detail, a radical new direction has been undertaken for the its retail arm. Big Box out of town stores will be launched to compete with Curry's and Comet, selling electrical goods from TVs to fridges. Meanwhile Carphone's fleet of telecom outlets will be supplemented by new format Wireless World stores targeting connected home entertainment products, laptops and gaming. Investing in such diverse retail distribution is a gamble, but gives The Carphone Warehouse a foothold in businesses with current and future potential.[42]

Tiscali UK[edit]

On 8 May 2009, Carphone Warehouse became Britain’s second largest broadband provider after BT after it agreed to pay £236m in cash for the UK assets of Tiscali, the Italian telecoms group. The business was later rebranded under the existing TalkTalk brand.[43]

Former competitors[edit]

The Carphone Warehouse has acquired four former competitors mobile phone e-tailers e2save, The Phone Spot, Mobiles.co.uk and OneStopPhoneShop. Orders are fulfilled through the Carphone Warehouse, but each company has its own terms and conditions and, significantly, rules regarding promotions.

Controversies[edit]

Data protection[edit]

During 2005, TalkTalk's proactive sales techniques drew criticism in the press when it was accused of practising "slamming" to win new customers. [44] Customers who bought mobile phones from Carphone Warehouse retail outlets alleged that their landline accounts were subsequently switched without their consent.[45]

On 15 August 2006, the Information Commissioner's Office issued Preliminary Enforcement Notices for breaches of PECR (The Privacy and Electronic Communications Regulations) against Carphone Warehouse and TalkTalk for making marketing calls to people who are signed up to the Telephone Preference Service (TPS) or people who have asked that the company make no further calls to them.[46][47]

On 28 October 2006, in a Times interview, Richard Thomas, Britain's Information Commissioner, stated:[48]

We're taking action against some of the telecom companies, Talk Talk and Carphone Warehouse. We're taking action against them because we've had a lot of complaints that they've been telephoning people with marketing calls, people whose name is on the telephone preference service. And then we do these prosecutions, particularly with private detectives. We've got a big case coming up.

See also[edit]

References[edit]

  1. ^ a b c Annual Report 2013
  2. ^ "David Ross appointed to board of the National Portrait Gallery". 10 Downing Street. 17 February 2006. Archived from the original on 2007-10-06. Retrieved 2006-11-02. 
  3. ^ Wray, Richard (2008-12-08). "Profile: David Ross". The Guardian (London). Retrieved 2008-12-08. 
  4. ^ Wray, Richard (2001-07-13). "Founder exits 'back seat' at Carphone Warehouse". The Guardian (London). Retrieved 2008-12-14. 
  5. ^ a b Cope, Nigel (2001-07-13). "Carphone Warehouse founder quits while he's (£140m) ahead". The Independent (London). Retrieved 2008-12-14. 
  6. ^ a b Ramnarayan, Abhinav (2008-12-08). "Profile: David Ross". The Guardian (London). Retrieved 2008-12-08. 
  7. ^ a b Sabbagh, Dan (2008-12-09). "David Ross: glitz and glamour of the upper-class 'barrow boy' with all the right connections". The Times (London). Retrieved 2008-12-09. 
  8. ^ Wilson, Amy (2008-12-08). "Carphone Warehouse co-founder David Ross quits after disclosure failure". The Daily Telegraph (London). Retrieved 2008-12-08. 
  9. ^ Boyle, Catherine (2008-12-08). "Carphone Warehouse chief resigns over share disclosure". The Times (London). Retrieved 2008-12-09. 
  10. ^ Carphone puts demerger details on the table Sean Buckley. Fierce Telecom. 1 February 2010
  11. ^ "Carphone Warehouse Snaps Up Tandy's Old UK Stores 01/26/99". Newsbytes PM,. 26 January 1999. Retrieved 2006-11-05. [dead link]
  12. ^ On 13 June 2001, the Group acquired the trade, assets and certain liabilities of Cellcom Limited, a telecoms services business registered in England, for a gross cash consideration of £9.1 m.
    [Archive copy at the Wayback Machine "Annual Report 2001"] (Press release). The Carphone Warehouse. 2001. Retrieved 2006-11-03. 
  13. ^ a b "Annual Report 2004" (Press release). The Carphone Warehouse. 2004. Retrieved 2006-11-03. 
    • "On 1 January 2004, the Group acquired 100% of the issued share capital of E2save.com Limited, a company registered in England, for an initial gross consideration of £1.4 m, with a further contingent deferred consideration of up to £3.3 m payable over two years."
    • "On 8 March 2004, the Group acquired 100% of the issued share capital of Xtra Telecom SA, a fixed line service provider registered in Spain, for an initial gross consideration of £7.5 m, with a further contingent deferred consideration expected to be up to £4.1 m payable over two years."
  14. ^ a b c "Annual Report 2005" (Press release). The Carphone Warehouse. 2004. Retrieved 2006-11-04. 
    • "On 1 March 2005, the Group acquired 100% of the issued share capital of One Stop Phone Shop Limited, a company registered in England and Wales that specialises in the mobile ‘off-the-page’ market, for an initial gross cash consideration of £8.3 m, with a further contingent deferred consideration of up to £6.7 m payable over two years."
    • "On 16 December 2005, the Group acquired 100% of the issued share capital of Tele2 UK Communications Limited (Tele2 UK), a company registered in Englandand Wales, for a gross cash consideration of £11.5 m. Tele2 UK is involved in the provision of telecommunications services to residential customers."
    • "On 19 December 2005, the Group acquired 100% of the issued share capital of Centrica Telecommunications Limited, Onetel Limited, Telco Holdings Limited, Awardmodel Limited and their subsidiaries (Onetel), all of which are registered in England and Wales, for a gross cash consideration of £169.6 m. Onetel is involved in the provision of telecommunications services to both residential and business customers."
  15. ^ "Free broadband forever" (Press release). The Carphone Warehouse. 2006-04-11. Retrieved 2006-11-08. 
  16. ^ a b c "Carphone Warehouse to acquire Time Warner's AOL Internet access business in the UK for £370 million". Carphone Warehouse Press Release. 2006-10-11. Retrieved 2006-10-27. 
  17. ^ "Vodafone cans Carphone Warehouse". The Register. 2006-10-12. Retrieved 2006-11-27. 
  18. ^ "X Factor-y on the high street". The Sun. 11 July 2007. Retrieved 2007-08-01. 
  19. ^ "Carphone in £1.1bn US partnership". BBC News. 8 May 2008. Retrieved 29 March 2010. 
  20. ^ "CPW Europe". Carphone Warehouse Group. 2012. Retrieved 23 November 2012. 
  21. ^ Durman, P. "Geek Squad comes to Britain", The Sunday Times online. Retrieved on 4 April 2007.
  22. ^ UK’s Carphone Warehouse to Open 1000 Stores in US with Best Buy | PhoneNews.com
  23. ^ Sweney, Mark (2007-06-19). "Carphone Warehouse gets the X Factor". London: MediaGuardian. Retrieved 2010-05-25. 
  24. ^ "UK police investigate threats against Big Brother celebs". Ireland on-line. 2007-01-17. Retrieved 2007-01-17. 
  25. ^ Brook, Stephen (2007-01-17). "Big Brother complaints explode". The Guardian Unlimited (London). Retrieved 2007-01-17. 
  26. ^ "Big Brother sponsor suspends deal". BBC News. 2007-01-18. Retrieved 2007-01-18. 
  27. ^ "Sponsor evicts C4's Big Brother". BBC News. 2007-03-08. Retrieved 2007-03-08. 
  28. ^ "FAQs". appys.com. Retrieved 12 April 2011. 
  29. ^ "Corporate Supporters". getconnected.org.uk. Retrieved 12 May 2011. 
  30. ^ "Get Connected appoints Fiona Clark and Helen Wood to senior charity roles". sportbusiness.com. Retrieved 12 May 2011. 
  31. ^ "Carphone Warehouse to acquire Time Warner's AOL Internet access business in the UK for £370 million". AOL UK Press Release. 2006-10-11. Retrieved 2006-10-27. 
  32. ^ "Carphone Warehouse buying AOL UK". BBC News. 2006-10-11. Retrieved 2006-10-11. 
  33. ^ "State of the nation – Local Loop Unbundling". thinkbroadband.com. 2006-10-26. Retrieved 2006-10-28. 
  34. ^ The exact figure for LLU customers is not in the public domain, hence 150,000 is the estimated minimum. "Carphone Warehouse with 421,000 live broadband users". thinkbroadband.com. 2006-10-26. Retrieved 2006-10-31. 
  35. ^ Judge, Elizabeth (2006-10-12). "AOL staff cuts follow its sale to Carphone Warehouse". The Times (London). Retrieved 2006-11-03. 
  36. ^ "Journalists fear cuts at AOL". The Press Gazette. 2006-11-01. Archived from the original on 2007-11-13. Retrieved 2006-11-07. 
  37. ^ "AOL Europe gets new head". The Register. 2006-11-01. Retrieved 2006-11-01. 
  38. ^ Sweney, Mark (2006-12-14). "AOL Europe loses another chief". The Guardian (London). Retrieved 2006-12-15. 
  39. ^ "How will I know if I exceed what is deemed acceptable usage?". AOL UK. Archived from the original on 28 September 2007. Retrieved 2007-04-20. 
  40. ^ "Free laptop deals: a short history". Choose. 
  41. ^ "Dunstone’s biggest deal launches Carphone into Wireless World". mobiletoday.co.uk. Retrieved 2008-05-14. [dead link]
  42. ^ "Carphone's strong points". mobiletoday.co.uk. Retrieved 2008-11-26. [dead link]
  43. ^ Call-up for Talk Talk The Sunday Times. 10 January 2010
  44. ^ "Phone scam hits thousands". Daily Mail. 2005-04-25. Retrieved 2007-03-19. 
  45. ^ Brignall, Miles (2005-04-23). "When slamming the phone prompts a row". The Guardian (London). Retrieved 2007-03-19. 
  46. ^ "Preliminary Enforcement Notices" (pdf). ICO. Archived from the original on 2006-11-12. Retrieved 2006-11-13. 
  47. ^ "Statutory Instrument 2003 No. 2426 The Privacy and Electronic Communications (EC Directive) Regulations 2003". Office of Public Sector Information. Retrieved 2006-11-13. 
  48. ^ Miles, Alice; Rumbelow, Helen (2006-10-28). "Full text of the interview with Richard Thomas". The Times (London). Retrieved 2006-11-13. 

External links[edit]