Hutchison Telecommunications is cutting contracts with up to five of its wholesalers, as the mobile phone company moves to a new distribution model.
One distributor -- ASX-listed Cellnet Group -- announced Monday that it had been cut, affecting $78 million in turnover and $1.2 million in net profit per year.
The distributor claimed in a statement that "all current distribution partners of Hutchison Telecom mobile products would cease to be distributors of Hutchison 3G and CDMA mobile phones from a date yet to be confirmed".
A Hutchison spokesperson was less forthcoming, saying that the company was in the process of changing its distribution model.
The spokesperson would not confirm that other distributors, which include Brightpoint, T Choice and Roadhound, have been cut. "It's not appropriate to comment on it," the spokesperson said.
Meanwhile, Cellnet managing director Stephen Harrison claimed Hutchison was taking control of product distribution, credit and finance itself. Cellnet had a 12-month contract with Hutchison which ran out in April, he said.
"It was a big ticket contract but had skinny margins at the end of the day. It's a blow, but we're excited about next year," he said.
"There are a number of initiatives currently being negotiated which will be advised to the market shortly. Those matters involve acquisitions and distribution contracts that will significantly mitigate if not cancel out the loss of the Hutchison contract," he added.
Cellnet chairman Darryl McDonough, said in a statement: "We will from time to time lose and gain distribution contracts -- that is the nature of the business. Strategically we have for the past year and a half purposely gone about changing our business model to make it more resilient to losses of this nature."
Executives from the aforementioned distributors were not available for comment at press time.