One of the UK’s best known mobile phone retail chains suspended trading on Monday, putting around 5,600 jobs at risk across the country.
Phones 4u said over the weekend it’d filed for administrator protection and therefore would not be opening its 550 stores Monday morning.
The move comes as a result of the decision by mobile network operator EE not to renew its contract with the company. With Vodafone having announced a similar decision just two weeks ago, Phones 4u will have no mobile network partners when EE’s existing contract expires on September 30 next year. Other networks, including O2, have also stopped selling through Phones 4u.
Administrators will have to decide whether the business can continue to trade, with meetings to be held on Monday.
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A statement from Phones 4u said the decisions by Vodafone and EE came as “a complete shock,” adding that until “very recently,” both companies had suggested they viewed Phones 4u as a long-term strategic partner.
Phones 4u CEO David Kassler said in the statement, “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.”
Kassler added, “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.”
An EE spokesperson told the BBC its decision not to renew its contract was down to “developments in the marketplace that have called into question the long term viability of the Phones 4u business,” adding that it also corresponded with EE’s strategy to focus increasingly on selling directly to customers, thereby cutting out middlemen such as Phones 4u.
‘Designed to inflict the maximum damage’
Phones 4u was founded in 1996 and was acquired by private equity group BC Partners in 2011.
Stefano Quadrio Curzio of BC Partners described EE’s decision as “surprising” given that the contract has more than a year to run.
He reserved his strongest words for Vodafone, however, which he said had “acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4u over more than six months.” He continued, “Their behavior 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.”
Phones 4u, which was voted Best UK Mobile Retailer in 2012 and 2013, has been taking pre-orders for the new iPhone 6 and 6 Plus devices since Friday, though it’s not yet certain whether it’ll be in a position to honor them.
Meanwhile, the company promised that mobile contracts historically bought through the retailer “will remain unaffected and the networks will continue to provide mobile services to these customers.”