Carphone Warehouse Shares Drop On Vodafone News

The Herald is reporting that the shares in Carphone Warehouse took a bashing on the news that Vodafone is switching away from them, to sell their mobile phone contracts through Phones 4U instead.

The shares dropped 13.9%

Vodafone cited that Phones 4U charging Vodafone a lower commission was the reason for the change. We suspect that doesn’t quite tell the whole story.

Carphone (as those in the industry call it) is becoming a major threat to Vodafone as they both move into other areas of communication – in the big communications convergence rush.

Carphone has been building up its bought AOL UK two days ago.

Vodafone themselves have recently moved into broadband, in a deal with BT. With Carphone effectively becoming a competitor, we assume that Vodafone don’t want to carry on giving them money.

If Vodafone’s choice to dump Carphone hurts them more will be revealed in the future. As Roger Taylor, FD for Carphone points out, “Every Vodafone customer that walks into our stores now will not walk out on a Vodafone contract.”