Retailer Phones 4u 'Forced Into Administration'

Phones 4u stores are closed with thousands of jobs at risk after the retailer said it was being forced into administration by network operator EE's decision to join Vodafone in cutting ties with the firm.

The retailer, which employs 5,596 people, said its 550 standalone stores would be shut until administrators decide on whether the business can reopen for trading.

Inquiry lines were still operational though the Phones 4u customer service line referred callers to the website, which has been taken offline.

The company said the decision by EE not to renew its current contract, which is due to end in September next year, was a "complete shock" and meant it would be left without a single network partner after Vodafone said earlier this month that it would not extend its agreement.

Potential store customers were greeted by closed doors and a short notice

Phones 4u said it has a healthy balance sheet with profits of more than £100m but had no option but to go into administration.

However, workers facing the threat of redundancy have been given hope by rival firm Dixons Carphone - Sky News has learnt that the business is preparing to highlight at least 1,500 vacancies at Carphone Warehouse stores for which Phones 4u staff would be eligible.

Phones 4u executive David Kassler said: "Today is a very sad day for our customers and our staff.

The retailer said the decisions of EE and Vodafone were a 'complete shock'

"If the mobile network operators decline to supply us, we do not have a business.

"A good company making profits of over £100m, 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.

"The ultimate result will be less competition, less choice and higher prices for mobile customers in UK."

Staff were asked to report to work as normal on Monday for a management briefing.

Phones 4u said all mobile contracts bought through Phones 4u would remain unaffected and the networks would continue to provide mobile services to these customers.

Customers were also told that orders which were not dispatched in advance of the decision will not be honoured, though full refunds will be given.

The formal process of appointing PwC as the administrator was expected to take place later on Monday.

The business was set up by John Caudwell, who sold it in 2006 for £1.5bn

The announcement helped shares in Dixons Carphone rise 4% in early trading.

Stefano Quadrio Curzio of BC Partners, Phones 4u's private equity owner, said: "Our overriding concern is for all the dedicated hard-working employees of Phones 4u at a time of uncertainty for the company.

"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.

"EE's decision on Friday is surprising in the context of a contract that has more than a year to run and leaves the board with no alternative but to seek the Administrator's protection in the interests of all its stakeholders."

A spokesperson for EE said its decision not to extend its contract with Phones 4u was part of a focus on supplying customers directly and questions surrounding the "long-term viability" of the Phones 4u business. 

Vodafone said it was "saddened" to read about Phones 4u's plight and added: "We strongly reject any suggestion that we behaved inappropriately at any stage during our negotiations with Phones 4u."

It has been revealed that Vodafone was in talks about a joint takeover of Phones 4U as recently as two months ago but abandoned the proposed deal without explanation.

Sky News has learnt that Vodafone executives discussed at a meeting in June with financial and legal advisers to Phones4U a takeover of the chain by the mobile phone network along with EE, its rival.

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