Carphone Warehouse no longer does what the name implies, having thrown in its lot with Best Buy, the major US consumer electronics retailer, to bring Best Buy stores to Europe.
Best Buy has pumped £1.1 billion ($2.14 billion) into the group to buy 50% of Carphone Warehouse’s retail interests, with Carphone Warehouse expected to use the money to pay down debt, and continue its bold initiatives into broadband and to invest in new ideas.
The existing Carphone retail business, with more than 2,400 stores in nine European countries will now add the Best Buy broader consumer electronics interest focused on wireless broadband opportunities. Carphone built its brand by offering impartial advice and the two plan to bring that idea to the wider format of consumer electronics retailing.
Carphone will also contribute its web and direct businesses, insurance operations, and airtime reselling businesses but keep ownership of its fixed line telecoms business made up of TalkTalk, AOL Broadband, Opal and a share of Virgin Mobile France.
The joint company will operate with both brands, Carphone Warehouse and Best Buy, and roll-out Best Buy stores, services and websites in selected markets, beginning next year, which would also sell Carphone broadband lines in the UK, because its current offering involves subsidizing broadband from mobile revenues as a bundle.
Carphone’s retail business had profits of £177 million ($349 million) on revenues of £2.9 billion ($5.7 billion) when it last reported.
Already before the ink had dried on the Best Buy deal, Carphone was already onto its next deal, one with Monitise and Metavante, which will see it enter the market for a mobile prepay card.
Metavante is a provider of pre-paid and licensed software in Europe, and Monitise is the company behind the Monilink, a mobile banking and payments network. The idea is to launch a Carphone prepay card which can be directly topped up through handsets from an existing bank account. Carphone will try to get the card used in millions of outlets worldwide while offering account management of the card from the phone.
The company is targeting a growing underclass of people that don’t want to be online through anything other than their handsets, and who increasingly want to use their handset ahead of a laptop for transaction management.
Prepay cards work in the same way as a prepay phone, in that you can only spend up to the value of credit you have at the time. This offers consumers a way to shop, mostly online or by phone, and they can never lose more than they have put into the cards already even if they lose their phone or prepay card. It can also act as a management tool in itself so people can only spend what they have. There is also the potential to use these cards as gifts.
Monitise is currently working partners such as BT Global Services, T-Systems, HSBC, first direct, Alliance & Leicester, Royal Bank of Scotland, NatWest, Vodafone, Orange, O2, T-Mobile and Hutchison 3G, although the Carphone card will be the first fully mobile generic pre-pay card.