Phones 4u, the long established UK mobile phone retailer, put itself into administration over the weekend, after Vodafone and EE decide not to renew their contracts. Although these contracts do not expire until next year – February and October respectively – the company decided to bring in the administrators without delay.
O2 had already departed at the beginning of this year, which left Vodafone and EE accountable for over 90% of the connections made by Phones 4u, and their withdrawal has put the company in an impossible position.
In a press release entitled ‘Decisions by Vodafone and EE force Phones 4u to seek Administrators’ protection’ , the company put it that:
‘This decision [not to renew its contract] by EE, which quickly follows a similar recent one by Vodafone, means that Phones 4u is suddenly in a position where it will be without a mobile network partner when the current contract expires.’
The decision is a massive blow to the UK mobile phone industry. Phones 4u, up to this point, had been a profitable business with an annual turnover of more £1billion, EBITDA (earnings before interest, taxes, depreciation and amortization) of £105 million for 2013, had 550 standalone stores and employed 5,596 people. (BC Partners )
Robert Jonathan Hunt, one of the appointed administrators to the phone retailer, said:
‘This is a very sad day for the business and the many people working there. In light of our impending appointment the directors understandably took the decision to close all the shops today and sent many staff home.
‘Our initial focus will be to quickly engage with parties who may be interested in acquiring all or part of the business, and to better understand the financial position and options for the company. The stores will remain closed while we have these conversations.’ (pac)
Vodafone and EE have expressed their distress at having been made scapegoats for Phones 4u’s move into administration. In a statement to Telecoms.com Vodafone said:
'We are saddened to read that Phones 4u have gone into administration and the impact that will have on their employees. However, we strongly reject any suggestion that we have behaved inappropriately at any stage during our negotiations with Phones 4u. […] Phones 4u were offered repeated opportunities to propose competitive distribution terms to enable us to conclude a new agreement, but was unable to do so on terms which were commercially viable for Vodafone in the current UK market conditions.'