\The company will likely focus on SIM-free phones and, if margins remain weak, could imminently wind down the division entirely.

AO acknowledged it faces “continued headwinds” in mobile, with revenue in the segment falling 11.2 per cent year on year. Key factors include a declining market, waning consumer interest in contract bundles, and rising customer acquisition costs, particularly through affiliate channels. “We do not have the appetite for continued losses in this area,” AO said in its results statement, underlining its strategic realignment.

But £29.7m Revenue from musicMagpie acquisitio has boosted its recommerce ambitions

AO acquired MobilePhonesDirect in November 2018 for £35 million but has now recorded a £19.6 million write-down on the business. This contributed to a 40 per cent drop in statutory profit, down to £20.6 million for the year.

Back in 2018 AO World announced ambitions to become the largest online-only mobile retailer in the UK after its acquisition of Mobile Phones Direct.

AO World planed to use MPD and its ability to offer airtime packages to increase business for AO Mobile, an internal division of the company.

Challenges

Despite the challenges, AO will not exit mobile entirely. Instead, it’s reshaping its strategy to focus on SIM-free devices, credit-backed propositions, a forthcoming MVNO launch, and the sale of refurbished phones. The company is shifting to a more profitable, direct-to-customer model.

Strong contribution from musicMagpie

AO also highlighted a strong contribution from musicMagpie, the recommerce specialist it acquired in December 2024.

The business delivered £29.7 million in revenue over the four months to March 2025, helping AO grow recommerce revenue to £42.6 million, up from just £10.6 million the previous year — a near 300 per cent increase.

Despite the revenue boost, musicMagpie posted a £1.7 million pre-tax loss in the period since the acquisition. AO excluded this from its like-for-like adjusted profit before tax, which rose 32 per cent year on year to £45.2 million.

The total cost of the acquisition was around £35 million, including £9.8 million in cash, £19.1 million in debt repayment, and £3.3 million in advisory costs.

AO’s CEO and founder, John Roberts, said the deal strengthens AO’s refurbished tech offering and supports its ESG strategy: “We expect that in time this will improve the affordability of many products on AO.com for customers, helping to further differentiate the AO proposition.”

The two businesses’ models are described as “highly complementary,” and their integration is expected to deliver efficiencies across AO’s vertically integrated reverse supply chain.

AO recognised £12.1 million in goodwill from the deal, alongside £11.2 million in intangible assets, including brand and technology. These valuations are still provisional. Looking ahead, Roberts struck an optimistic tone: “Given the size of the prize — with a total addressable market of over £28bn — and the fantastic momentum we’re seeing across the business, I couldn’t be more excited about the next 25 years. In many ways, we’re only just getting started.”

]]> https://mobilenewscwp.co.uk/news/article/ao-likely-wind-contract-mobile-business-losses-mount/feed/ 0 https://mobilenewscwp.co.uk/news/article/musicmagpie-will-sold-ao-10-million/ https://mobilenewscwp.co.uk/news/article/musicmagpie-will-sold-ao-10-million/#respond Wed, 02 Oct 2024 10:39:44 +0000 https://mncwp.tailrd.cloud/musicmagpie-will-sold-ao-10-million/ AO is to buy musicMagpie £10 million. The deal is structured as a “scheme of arrangement” and is expected to be finalised pending court approval. Around 54 per cent of MusicMagpie shareholders, including key institutions, have shown support for the acquisition. A scheme of arrangementis a legal process used in corporate transactions, including mergers, takeovers,