3 moots retail boost with Phones4U bid

Third-generation mobile phone operator 3 is being linked with a bid for Phones4U after the retail chain’s billionaire founder John Caudwell called in advisers to sound out potential buyers for his business empire.

There is speculation that 3’s parent company, Hutchison Whampoa, will make a bid for Caudwell’s 350 Phones4U outlets in order to increase its high-street presence. The company was reported to be interested in buying Phones4U in 2002 before it set up 3.

As well as in-store space in Superdrug, 3 has a limited number of high street units. Superdrug is owned by AS Watson, Hutchison’s retail arm. But 3’s rivals Vodafone, Orange, O2 and T-Mobile are all strongly represented on the high street.

It was reported earlier this year that 3 was planning to build a nationwide chain of stores. At present, it has just three flagship outlets but is planning to open 20 by Christmas.

One telecoms source says it would make sense for 3 to improve its distribution channels now that its customer numbers are reaching significant levels.

The UK launch was plagued by reliability problems and complaints about bulky handsets. But last year it increased its customer base from 215,000 to more than 2.5 million with an aggressive pricing strategy and a series of high-profile advertising campaigns from WCRS.

A 3 spokeswoman refuses to comment on the Phones4U rumours, but a company source says it is unlikely to be interested in acquiring the chain at present.

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