Phones 4u, the high street mobile phone retailer, has gone into administration on Sunday night according to the company's owners.
"The unexpected decisions by both Vodafone and EE have come as a complete shock to the business. The company is in a healthy state and both EE and Vodafone had, until very recently, consistently indicated that they saw Phones 4u as a long-term strategic partner," the company said in a statement to the press.
All 720 outlets will not open on Monday and Phones 4u stores will be closed pending a decision by the administrators on whether they can be reopened for trading. Mobile contracts signed through the retailer will be unaffected. Almost 6,000 jobs are to be affected.
EE has independently told Pocket-lint that the mobile phone operator would not be renewing its contract after September 2015, a year's time.
"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."
It looks like the high street retailer has thrown in the towel based on the tough times ahead rather than look for a viable alternative.
"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," said David Kassler, Chief Executive of Phones 4u.
That's not surprising as with EE's departure, the retailer would only be able to sell phones with a Virgin Mobile contract after O2 pulled out in May, Vodafone last week, and EE today. Mobile operator Three has always refused to work with the company.
Last week Phones 4u was hit by the huge blow that Vodafone was pulling out of the stores.
At the time Phones 4u's CEO David Kassler said that he was disappointed with Vodafone's decision, which came after meetings to convince Vodafone to change its mind. He also claimed that the retailer is in active talks with other networks and partners, possibly to fill the void, but it looks like that didn't happen in time.
O2 previously pulled away citing that contracts sold through Phones 4u only made up 8 per cent of its entire network sales for 2013. But although Vodafone has not made similar claims, the high street chain claims that it sold 430,000 Vodafone contract connections and 125,000 prepay SIMs in the 12 months to February, generating over £230 million in business.
What's strange is that no one yet knows what the series of events has been to force the operators to remove support for the retailer. According to the company, Phones 4u is a profitable, well-managed business with 550 standalone stores, employing 5,596 people.
On Monday the Phones 4u website was shut down, leaving a breif message for visitors to the site.
In response the comments made by Phones 4u, Vodafone has issued a statement:
"We are saddened to read that Phones4U have gone into administration and the impact that will have on their employees. However, we strongly reject any suggestion that we behaved inappropriately at any stage during our negotiations with Phones4U. The outcome was the result of a transparent negotiation over many months. Phones4U was 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."
"We were told by the Phones4U management team that they had little commercial flexibility due to their debt repayment obligations, but that they had a number of alternative strategies in place if we couldn't reach an agreement with them. So when we terminated our contract earlier this month, we made it clear that we would honour our existing contract, which runs until February 2015, to give them sufficient time to finalise one of those alternative strategies. It is now clear based on the events that have transpired that there were no viable alternative plans in place."
Ironically the phone retailer's latest advertising campaign featured employees in 2015 and on the set of Back To The Future 2 giving phone advice, sadly it doesn't look likely that it will make it to next year now.
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