Cellucom shuts up shop amid legal row

The mobile phone retailer's stores in the country, including the one in Ibn Battuta Mall, have been closed since September.

Cellucom, one of the largest mobile phone retailers in the country, has shut down all its stores in the UAE and its chief executive has moved to Africa amid a legal case involving its majority shareholder, Al Rostamani Group. Cellucom, which once had more than 500 stores across the GCC, Africa and India, began closing its more than 25 Cellucom and Eon outlets across the Emirates last September, said Sudhir Kamat, the accounts director at Cellucom.

Ajay Nagar, a former Cellucom executive and a brother of the Cellucom chief executive Arun Nagar, said the head of the company was in Tanzania continuing to expand the business. Ajay Nagar said his brother left the UAE in March of last year, and confirmed that Cellucom had closed all its stores in the UAE. Mr Kamat also said Arun Nagar was no longer in the UAE. "More or less, the operation is closed down and it is in court now," Mr Kamat said. Arun Nagar could not be reached for comment.

Al Rostamani Group, which entered an alliance with the electronics retailer in 2007 and holds a 51 per cent share, said in a statement yesterday that it filed for liquidation of Cellucom FZCO and Cellucom LLC last June. "Having reviewed Cellucom's business and financial affairs, Al Rostamani Group concluded that the Cellucom companies could no longer sustain themselves as going concerns," the statement said.

"Al Rostamani Group has acted responsibly in the interests of the Cellucom creditors and shareholders in filing the liquidation proceedings." Al Rostamani's application is pending final judgment from the Dubai Courts, and the company said it would not comment further. Cellucom's store closures came in an extremely difficult year for retailers across the region. Although the number of units of consumer electronic goods sold in the Emirates last year rose 1.5 per cent, the total value fell 33.8 per cent to Dh2.19 billion (US$596.2 million) as makers and retailers discounted heavily to attract buyers, according to the consultancy GfK Retail and Technology.

Nadeem Shaikh, the retail service manager at GfK in Dubai, said that although Cellucom had a large network of stores, it had difficulty competing with the bigger players during the economic downturn. "The power retailers like Sharaf DG and Carrefour, they became much more significant," Mr Shaikh said. "And the smaller retailers that didn't have that much capital, they evaporated from the market." And with rents for retail shops remaining high in the face of narrower profit margins, Cellucom might have had trouble keeping up with its overheads, he said.

Cellucom opened its first outlet in 1995 and by 2008 had grown to almost 300 stores, according to its website. By that time, its workforce numbered more than 1,500, and Cellucom was the authorised dealer for big mobile brands such as Nokia and Samsung. Its store openings were often star-studded events. The company's 2004 opening of an outlet in Dubai's Satwa area was attended by the Bollywood actress Sameera Reddy.

As recently as January last year, Cellucom had entered into a joint venture agreement with India's Spice Group, which also makes mobiles and develops mobile software. In turn, Spice acquired a 100 per cent stake in Cellucom India, the master franchisee of Cellucom. But Arun Nagar decided to close the company's UAE outlets last year, Mr Kamat said, adding he did not know why. Cellucom's head offices in the Dubai Airport Free Zone were empty last Thursday except for a handful of employees and a security guard. The Cellucom and Eon stores in Dubai Mall have been closed and bore notices from Dubai Courts ordering their closure.

"There is a dispute between the shareholders. Due to that, working-capital problems arose, so they can't run the business," Mr Kamat said. [e-mail]