Intermoney| Phone House Spain, a subsidiary of Dominion (DOM), has notified the workforce and the relevant authorities of its intention to initiate redundancy proceedings (ERE in its Spanish initials) for economic, productive and organisational reasons. This redundancy plan would affect 304 employees at 67 sites in Spain, employing 452 people.
In the framework of the negotiations, which will end tomorrow, Thursday, the company is offering the affected workers a severance payment of 22 days per year worked, with a maximum of 14 monthly payments, or 23 days with a maximum of 13 monthly payments. For its part, the trade union UGT demands that, in order to be able to start negotiating, it should start from a compensation of 25 days with a maximum of 24 monthly payments. In the previous ERE applied by Phone House, in November 2020 and which affected 435 people, the agreement was closed with a compensation of 30 days per year of service with a maximum of 17 monthly payments and a maximum of €48,000.
Assessment: Dominion closed the purchase of Phone House from Dixons Carphone group six years ago, in September 2017, for a price of €55Mn. At the time, Phone House’s adjusted turnover was €77Mn, with EBITDA close to €11Mn, so the acquisition was made at a 5x EV/EBITDA multiple. The business, later integrated into the Smart House division, had adjusted revenues of €191Mn in 2021, with a contribution margin of €19Mn. However, since the start of the war in Ukraine, strong inflation in energy costs and consumer products has had an acute impact on Phone House’s business, both in the part of its energy retailer (in September 2022 it reached an agreement with Repsol to sell it its energy customer base) and in handset sales. In fact, in its new strategic plan 2023-2026e, presented a few months ago to the market, Dominion now reports only two divisions (Services and Projects) and the Phone House business has been integrated into the Services division.
The final number of employees affected and the agreed severance payments will have to be awaited in order to calculate the impact on this year’s results.
