Mobile phone retailer Phones4U has entered administration after suppliers EE and Vodafone decided against renewing contracts with the company.
Phones4U stores have not opened this morning and the company’s 5,596 staff are now facing redundancy. The company operates 720 outlets, including 550 stores, throughout the UK.
The company’s owners, private equity firm BC Partners, have appointed PwC to handle the administration.
Vodafone made the decision not to renew its supplier contract with Phones 4U earlier this month. EE then followed suit on Friday (12 September).
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 £100m, 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.”
Robert Jonathan Hunt, Ian David Green and Robert John Moran of PwC were appointed as administrators to Phones 4u Limited and Life Mobile Limited, the company’s network operator.
Rob Hunt, partner at PwC, 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.
“We will also be talking to network operators and suppliers, and trying to access funds to pay for the costs of the business, including wages.
“These conversations will determine whether we can re-open stores and trade, and also if and when we can pay the arrears of wages to employees. Our hope is that we will be able to pay all the outstanding wages arrears.”
The company has said it will honour all established mobile phone contracts, although new orders would be affected by the administration.
Stefano Quadrio Curzio, BC Partners executive, said: “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.
“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.”