Why Did Phones4U Go Into Administration?

The well-known high street mobile phone brand Phones4U has been facing troubling times recently, suffering from partnership setbacks with some of the largest mobile phone networks in the past few months.

Three months ago, EE, the United Kingdom’s largest mobile network, threatened to drop Phones4U partnership in favour of going it alone on the high street. Indeed, EE’s success over the past few years as a solo operator has been substantial. However we heard today that Phones4U had gone into administration after EE refused to renew their contract on Friday.

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The reason behind Phones4U’s departure was clever manoeuvring by both EE and Carphone Warehouse. as on top of EE’s departure came the announcement of Vodafone’s decision to fill the contract space with Carphone Warehouse which EE had recently vacated. Indirectly, it seems, Carphone Warehouse has ensured Phone4U’s demise.

Now that the phone retailer’s partnerships have all been severed, there seems to be no future for Phones4U, with company bosses explaining that “The unexpected decisions by both Vodafone and EE have come as a complete shock to the business,”. Indeed, the company was doing quite well before the start of this year. A lot can change in 9 months though.

David Kassler, Phones4U CEO was sad to see the company befall such hard times, especially since they had been doing so well previously. “A good company making profits of over £100m, employing thousands of decent people has been forced into administration,” he said.

Luckily the company will honour any existing contracts with customers, although there’s no word on whether the iPhone 6 pre-orders the company was to handle will go through, given the costly nature of the device.

Phones4U says that Vodafone pulled out of any further negotiations with the company even after they had “consistently indicated to the management of Phones4U over more than six months” that a deal between the two would be renewed, but then made the decision not to in a seemingly last minute move. It seems like that the actions of others ultimately decided Phones4U’s fate.

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Although the company has some minor contracts still in service, the customer turnout for Phones4U is just not big enough to financially sustain the 550 store locations on high streets around the country. In the meantime, the company says stores will close, contracts will be honoured, and the company will seek help getting back on its feet, if it somehow can.

The fate of the 5,596 people employed by Phones4U is unclear following closure of stores, we’ll keep an eye out for any information as it comes out. Announcements should come out in the next few weeks determining whether the company is gone for good or not.

Source: BBC 

Via: Engadget