More than £450 million was wiped off the value of Carphone yesterday after a decision by Vodafone, Britain’s most profitable mobile operator, to end a 17-year relationship selling phones in Carphone’s stores.

Last night Orange — another key Carphone client — indicated that it might follow suit, declaring that it was “in the process of reviewing” its sales strategy for next year.

Carphone, which a day earlier was still revelling in its success in pulling off the £370 million acquisition of AOL, Time Warner’s UK internet business, was shocked by Vodafone’s move.

Though it insisted that losing the mobile operator — which accounts for less than 10 per cent of its contract business — would have no financial impact, the move marked a significant dent to its reputation and the souring of its relationship with the world’s biggest mobile group.

The decision by Vodafone — which has reduced its commission costs by negotiating a better deal with Carphone’s high street rival Phones4U — undermines the entire strategy on which Carphone has been built. Its aim since its birth in 1992 has been to provide impartial advice across the whole range of operators and tariffs. Vodafone was one of its first two customers.

Analysts estimated that Vodafone — which has been forced to cut costs as it struggles to reposition itself amid fierce competition and a host of threatening technologies — should see a 20 per cent reduction in the cost of acquiring each contract customer as a result of the deal.

Charles Dunstone, Carphone’s chief executive, said: “Of course this is not a good thing. I would have liked things to carry on as they were.” But he added that Vodafone’s demands, which included that Carphone should sell a certain volume of its phones in a given period, were not feasible.

He declared he had “no axe to grind” with Vodafone and would be happy to continue selling its pay-as-you-go phones. That deal is currently under review.

Nick Read, head of Vodafone’s UK business, maintained that the relationship “is a good one”. However he suggested that Carphone’s business model was becoming increasingly flawed. “Obviously as he [Mr Dunstone] expands the services he is offering, he is increasingly going to overlap with our business and our strategy,” Mr Read said.

As the market has matured, key mobile operators have sought to cut costs by selling directly through their own stores.

The threat to Carphone’s core retail distribution business comes as it was seeking to put behind it the chaos that resulted from its “free” broadband offering.

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