AO World Boss Could Close Mobile Division as Profits Plunge

The chief executive of AO World has indicated the company may shut down its loss-making contract mobile phone business within two months if more profitable arrangements with network providers cannot be secured.

John Roberts, who established the online retailer following a £1 pub wager in 2000, emphasised that whilst AO isn’t abandoning mobile phones completely, the company is seriously evaluating the closure of its mobile network contract operations.

The announcement comes amid concerning financial results, with statutory profits declining 40 per cent to £20.6 million in the year ending March, down from £34.3 million in the previous period. The significant drop follows a £19.6 million write-down on AO’s mobile division valuation. Despite these challenges, adjusted pre-tax profits showed improvement, rising 27 per cent to £44 million, while revenue increased 9 per cent to £1.13 billion.

The mobile division has weathered what Roberts described as a “challenging year,” with the contract mobile phone market experiencing a 13 per cent decline. This downturn has been attributed to subdued consumer demand, minimal handset innovation, and a shift towards separated contracts.

Roberts revealed plans to launch AO’s own mobile network offering in the current financial year, promising an “incredibly simple proposition” alongside a new handset offer, enabled by the recent £35 million acquisition of musicMagpie.

The company is also confronting broader market challenges, with electrical product sales at 15-year lows. Roberts highlighted the absence of significant technological advancement in recent years as a contributing factor, though he suggested AI developments might stimulate future growth.

Cost pressures remain a significant concern, with wage expenses increasing by £8 million due to higher national insurance contributions. The company plans to address these challenges through increased automation, outsourcing, and offshoring, though Roberts has assured employees that no job losses are planned.