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Jobs Crisis at Phones4U as Stricken Firm Enters Administration

Written by: Keith Tully

Reviewed: Sunday 14th September, 2014

empty building

Phones4U has announced it is entering administration after EE, its last remaining mobile network partner, cut ties with the struggling retailer just two weeks after Vodafone did the same.

The news, which broke late on Sunday evening, puts 5,596 jobs in grave danger with staff notified to attend work as normal for an urgent briefing on Monday morning. Phones4U currently has 720 outlets and 550 standalone stores across the UK.

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"We have been told to report to work as normal but that the store will not be opening as we have no networks to sell."
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One staff member at Phones4U in Preston told Real Business Rescue:

“We found out about the administration at the same time as the general public on Sunday evening. There were rumours something might happen but we had no idea it was to this gravity. We have been told to report to work as normal but that the store will not be opening as we have no networks to sell.”

BC Parters, Phones 4U's private equity owner, said it is "intended that employees will continue to be paid until further notice".

It is believed all mobile contracts signed through the retailer will be unaffected though it is unknown whether customers who have pre-paid for the iPhone 6, due for UK release on 19 September, will be reimbursed.

EE, which is understood to account for around half of Phones 4U’s £1bn sales, made its decision after a strategic review. Vodafone, which said it would not renew its contract with the retailer earlier this month made up more than a quarter of sales. O2, which only accounted for around 10pc of sales, pulled out in February.

EE reached the decision amid concerns that Phones 4U was selling for only one of Britain’s main mobile operators. It was felt this reduced its appeal for customers who wanted to compare the prices of different operators.

Stefano Quadrio Curzio of BC Partners said: “Our overriding concern is for all the dedicated hard-working employees of Phones 4U at a time of uncertainty for the company."

"Vodafone has acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4U over more than six months. Their behaviour appears to have been designed to inflict the maximum damage to their partner of 15 years, giving Phones 4U no time to develop commercial alternatives.

"EE's decision is surprising in the context of a contract that has more than a year to run and leaves the board with no alternative but to seek the Administrator's protection in the interests of all its stakeholders.”

David Kassler, chief executive of Phones 4U, said: “Today is a very sad day for our customers and our staff. If the mobile network operators decline to supply us, we do not have a business. A good company making profits of over £100 million, employing thousands of decent people has been forced into administration.

"The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise. The ultimate result will be less competition, less choice and higher prices for mobile customers in UK.”

Phones 4 U image by Mtaylor848. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons.

Keith Tully

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Keith Tully
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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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