Thousands of jobs at risk as Phones 4u enters administration

NORTH Staffordshire mobile phone retailer Phones 4u is set to close its 550 stores today after it went into administration last night.

The retailer lost a key contract with EE last week, soon after losing one with Vodafone, and despite being a profitable business, with turnover of £1bn and underlying profits of £105m in 2013, it says without the contracts from the phone networks it can no longer operate.

Phones 4u chief executive David Kassler 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.”

Phones 4u said it had only received EE’s decision late on Friday.

Vodafone had also severed its link with the retailer recently and its tie-up with Phones 4u represented some £212m of sales in the year to July 31. 

Confirming the administration move a statement made to the London Stock Exchange this morning, Phone 4u Finance said connections procured under the network agreements with Vodafone and EE currently represent in excess of 90% of the connections made by the firm.
 
The Newcastle-under-Lyme firm employs 5,596 people and all their jobs are now at risk.

The chain is owned by private equity firm BC Partners.

PwC is expected to be appointed as administrator today and the stores will be closed until a decision is taken on whether they can continue trading.

Phones 4u said all mobile contracts bought through Phones 4u will remain unaffected and the networks will continue to provide mobile services to these customers.

Phones 4u was set up by the entrepreneur John Caudwell in the middle of the 1980s and sold for £1.5bn some 20 years later.

By the time he sold it, it was selling 26 phones a minute and employed 10,000 people. It generated sales of more than £2.25bn. 

A statement from EE said: “In line with our strategy to focus on growth in our direct channels and to move to fewer, deeper relationships in the indirect channel, and driven by developments in the marketplace that have called into question the long-term viability of the Phones 4u business, we can confirm that we have taken the decision not to extend our contract beyond September 2015.

“We will monitor developments and work to provide any necessary support for customers who joined EE through Phones 4u.” 

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