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Telecom News - Phones4U

Telecom News - Phones4U

15/09/2014

Afternoon! It’s the start of the week and a busy one here for us!!

Well some sad news this morning, Phones4U have been placed into administration this morning putting up to 5596 jobs at risk! They have appointed PricewaterhouseCoopers as administrators. Phones4U are owned by a private equity firm BC Partners and all 550 stores nationwide will not open from today. After EE announced they would not be renewing their current contract (due to renew in September 2015) and last week Vodafone confirmed they also would not be renewing. This left Phones4u with only Virgin as a network they could supply.
So what happened? On the 31st January this year O2 terminated their agreement to supply phones and contracts through Phones4u. O2 had sited that only 8% of their entire network sales 2013 where sold through Phones4u. At the beginning of this month Vodafone confirmed that they will not be renewing their contract with Phones4u, it is believed that Vodafone’s decision was partly motivated by BC Partners’ decision to issue more than £200m in bonds which resulted in a dividend payment of the same amount in a cash dividend. Vodafone are understood to have seen this to be a sign that BC Partners do not see Phones4u having a long-term future. BC Partners have however disputed the reasoning for the dividend payment. As a result of Vodafone’s confirmation that the contract will not be renewed and increasing speculation that EE, who were reviewing their relationship with Phones4u at this point, will also not renew Moody’s credit rating agency confirmed they would be assessing a downgrade which could make it difficult for the company to raise funds. Then this morning news that EE have decided they will not renew their contract for distribution with Phones4u, so far no definitive reasoning has been released.
With all of this happening BC Partners brought PwC (PricewaterhouseCoopers) to decide if they would be able to continue to trade and as of this morning the doors to the Phones4u shops are shut. The 5600 employees will continue to be paid ‘until further notice’ but it is very likely a number of these people will be losing their jobs. Without any of the top 4 mobile phone operators distributing through them, to me there is little they can do.
There has been some mudslinging already from both Phones4u and Vodafone. Stefano Quadrio Curzio of BC Partners said that Vodafone’s actions “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”. My view on this is simple. O2 who pulled out in February of this year should have clearly signalled to Phones4u that the market is changing and that would have been the time to quickly review what they would be able to do if Vodafone or EE (or both) decided not to renew. It is quite clear to us all the formation of EE (T-Mobile and Orange joint venture) gave the operator huge presence on the high street with 626 stores. Vodafone in April announced that they would be opening 150 new stores over a 12 month period taking their presence on the high street to more than 500. For me the planning of alternative business activities should have started long before Vodafone’s announcement that they would not be renewing. And to state they are the reason that Phones4u have not had time to develop commercial alternatives is utter rubbish.
What’s next then for the customers and staff of Phones4u? Well for the customers all existing mobile phone contracts will be honoured, insurance policies that have already been taken out will also be honoured. The company has said that any phones yet to be dispatched will be cancelled and refunds issued to the customers. For the staff well it’s currently uncertain. With EE, Vodafone and Carphone Warehouse all looking to open new stores there is certainly potential for opportunities there. For any staff of Phones4u looking for a new opportunity in the Telecom industry then please contact us, we specialise in Telecom Recruitment and have a number of clients who would be happy to speak to you. You can forward your CV to us by email Candidates@BoyleJameson.com or visit our website www.BoyleJameson.com

Let’s hope for some good news in the coming days for all involved at Phones4u.

Have a good week.

AJ Jameson

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