Mobile retailer Phones4U on Sunday announced it has plunged into administration after its key mobile supplier EE notified it would no longer continue business relationship with the UK retailer.
The contract in question between Phones4U and leading mobile operator EE, which comprises T-Mobile and Orange, scheduled to end in September next year, was way too important for the retailer as it had failed to renew a similar business contract with Vodafone earlier this month.
The mobile phone retail chain, owned by private equity firm BC Partners, currently has 720 outlets, including 550 stores and about 5,600 employees working under it. The company said all its 550 stores will remain closed on Monday pending a decision by the administrators that will decide its future course of action on whether the business can be reopened for trading or not.
Phones4U Chief Executive David Kassler in a statement said the unexpected decision coming from both EE and Vodafone to cut business tie-up with the company comes as a “complete shock” and that if the situation continues then Phones4U will not have a business at all.
He said it was a “very sad day” for both customers and staff as a good company making profits of over £100m, employing thousands of decent people has been forced to enter administration.
The retailer announced all mobile contracts bought through Phones 4u will not be affected and that networks will continue to provide mobile services to these customers.
Explaining the reason, an EE spokesman said the decision to not to extend business contract beyond September 2015 comes in line with the company’s strategy to focus on direct channels’ growth and to move to fewer, deeper relationships in the indirect channel, and is driven by developments in the marketplace that have called into question the long-term viability of the Phones 4u business.
The company said the process of PwC’s appointment as an administrator is under way and is expected to take place on Monday.
