High street mobile phone retailer Phones 4u has entered administration and made the surprise decision to immediately close all of its stores.
The chain employs 5,596 people and operates 500 stores in the UK, all of which have ceased trading this morning while administrators PwC assess the business's ongoing viability.
The decision comes after EE followed Vodafone in announcing that it would not renew its contract with the retailer, effectively leaving it without any operator partners and unable to offer products.
The unexpected decisions by both Vodafone and EE have come as a complete shock to the business,” a Phones 4u statement said. 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.
Phones 4u is a profitable, well-managed business [and] has a turnover of over 1 billion, EBITDA of 105 million for 2013 and significant cash in the bank. However, following the decisions of Vodafone and EE, Phones 4u has no option but to seek the appointment of administrators from PwC.”
Chief executive David Kassler added: 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. The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise.”
Stefano Quadrio Curzio of Phones 4u owners BC Partners was even more damning, saying: 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 has said that all contracts previously bought will be honoured by network operators. Those who have pre-ordered the iPhone 6 have also been promised refunds, while any orders that have already be dispatched will be honoured.