UK retailer Phones 4U has been forced into administration, after operator EE said it would be ending its relationship with the company.
EE’s decision follows a similar move from Vodafone UK, which informed Phones 4U at the beginning of the month that it did not plan to renew its contract when it expires in February next year.
In a statement to the London Stock Exchange, Staffordshire-based Phones 4U said it had been in discussions with other operators and MVNOs to replace the volumes lost by Vodafone’s exit.
But its options narrowed when EE informed it on Friday last week that it had also decided not to renew an agreement with the retailer, which is due to expire in just over a year’s time (30 September 2015).
Phones 4U said in a press release that the decisions of Vodafone and EE “have come as a complete shock to the business” with both having “consistently indicated that they saw Phones 4U as a long-term strategic partner”.
According to the statement, Vodafone and EE “currently represent in excess of 90 per cent of connections made by Phones 4U”.
The other two UK mobile operators, O2 and 3 UK, previously announced plans to withdraw after a review of their activities with third-party retailers, which compete with their own-brand stores.
Phones 4U has its own Life Mobile brand (launched in 2013), and also works with a number of other MVNO players, including Virgin Mobile. However, it appears that this isn’t enough to keep the company going as a viable concern.
Taking into consideration the loss of EE and Vodafone, the company concluded that there is “no reasonable prospect of avoiding insolvent liquidation”, meaning it is no longer able to continue to trade.
The company’s 550 stores are closed today with the business placed into administration with PricewaterhouseCoopers. Employees were informed that they will continue to be paid until further notice, with customer contracts bought through Phones 4U unaffected.
Phones 4U noted that the business is profitable and well-managed with its stores employing close to 5,600 people. It had a turnover of £1 billion in 2013 and has significant cash in the bank.
“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 Phones 4U chief executive, David Kassler.
Carphone Warehouse, the other major independent phone retailer in the UK, recently merged with Dixons to create a retailer focusing on the internet of things. In what must be a kick in the teeth for Phones 4U, Vodafone is planning to enhance its distribution partnership with Dixons Carphone.