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EE and Vodafone in talks to buy up the best bits of Phones 4U

by Mark Tyson on 17 September 2014, 10:30

Tags: Carphone Warehouse, Everything Everywhere, Vodafone (LON:VOD)

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Phones 4U announced over the weekend that it had gone into administration due to the termination of its only remaining contract with mobile operator EE. However, new sources close to the situation (via the Financial Times) have claimed that EE and Vodafone are in talks to acquire parts of the company. This same two firms withdrew their support for Phones4U in the past few weeks.

Rob Hunt, one of three joint administrators at PwC confirmed that Phones 4U is in talks with three parties to acquire "a combination of a proportion of stores, the people and some of the stock". However, he would not reveal the identity of the companies.

EE and Vodafone are said to have spoken to the administrator separately regarding purchasing stores, staff and stock of Phones 4U, whilst high street electronics retailer Dixons Carphone is also working on a deal to take on 800 staff from the company to work in its own stores. Phones4U's demise has put 5,596 jobs at risk. The Phones 4U administrator has agreed a wavier with Dixons Carphone on an agreement which previously prevented poaching from rival companies.

Dixons Carphone may also be considering buying some of Phones 4U's 550 standalone stores, and even the company's brands. The Financial Times source points out that EE could be purchasing anywhere from "a handful" to 80 of the stores, saving the jobs of those current employees along with the acquisitions.

Both EE and Vodafone were in talks about pursuing a joint 50:50 takeover of Phones 4U as recently as two months ago, reports Sky News, although the plans were abandoned in the end. The two companies deny that they are to blame for the collapse of Phones 4U, with a Vodafone spokesperson highlighting that "the decision to terminate our contract with them was made independently by the UK management team on purely commercial reasons following extensive negotiations."

Meanwhile we hear that staff at Phones 4U await daily decisions on whether money has been secured to cover wages for another day.



HEXUS Forums :: 40 Comments

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My rage at the thought of EE and Vodaphone benefitting from this is burning a hole in my chest. This needs to be investigated right now. Plans to purchase a high street brand aren't generated over night. This is a cold and calculated plan. Or maybe I'm just cynical.
So let me get this straight…

EE and Vodafone refuse to renew their contracts with Phones4U, effectively killing the company overnight. They then get to swoop in and snap up all the best real estate and stock, no doubt at a knock-down price, as well as the best staff. They then use those acquisitions to expand their own retail operations, and with one of their major competitors out of the way no doubt use the opportunity to increase margins.

Sounds like a no-brainer for EE and Vodafone, but terrible news for the customers :(
Not cynical - just coming to the realisation that this is what we have allowed our country to become - an economic battlefield for rich conglomerates rather that a fair society of citizens.
Jowsey
My rage at the thought of EE and Vodaphone benefitting from this is burning a hole in my chest. This needs to be investigated right now. Plans to purchase a high street brand aren't generated over night. This is a cold and calculated plan. Or maybe I'm just cynical.

why rage? do you work for any of the companies?

as long as no party has broken the law then what's the problem?

we know some of the phones companies had been looking to go into partner ship with phones 4 u but a deal wasn't reached. i've been in the same boat myself. a company wanting to buy the company I worked for, and they pulled out last minute as there was an issue over terms. so the company I worked for went insolvent as business wasn't good and they had screwed up a big deal that gave them a lot of money which they invested badly and generated considerable debts. in the end the company that was going to buy them ended up buying the company, but without having to repay a large amount of debt to the banks that was part of the deal

this isn't an unusual situation
CK_1985
So let me get this straight…

EE and Vodafone refuse to renew their contracts with Phones4U, effectively killing the company overnight. They then get to swoop in and snap up all the best real estate and stock, no doubt at a knock-down price, as well as the best staff. They then use those acquisitions to expand their own retail operations, and with one of their major competitors out of the way no doubt use the opportunity to increase margins.

Sounds like a no-brainer for EE and Vodafone, but terrible news for the customers :(

I'm not sure why it's terrible news for the customers

if phones4u operated their business in such a way that they were over reliant on one or two suppliers to be profitable, it doesn't sound a great business model to begin with. if they then can't reach an agreement with these suppliers that are essential for the ongoing operation of the business, then they only have themselves to blame

most of what the business seems to have been doing is acting as a sales agent on behalf of other companies, so vodaphone and EE are given them a cut of sales of their products and services, when they could sell direct

the customer can still choose what phone they want and which supplier, but now if p4u close they have one less supplier that sells a number of service providers under the one roof. there are still others including carphone warehouse, and more and more of service providers own stores appear to have popped up, usually next to competitors so you can still buy direct if you prefer

if you as a service provider want to run your own stores selling your goods, then giving one of your competitors those same goods and services to sell at a similar or same price isn't always a great idea