Phones 4U in administration as Vodafone denies acting 'inappropriately'

Phones 4U shops will not open today as the mobile phone retailer goes into administration, blaming decisions by EE and Vodafone to pull out of Phones 4U stores.

Phones 4U is, along with Carphone Warehouse, the UK's major high street mobile phone retailer, employing 5,596 people in 550 stores. Like Carphone Warehouse, Phones 4U sells a range of phones and contracts on various networks, which means that it needs those networks to continue supplying those phones and deals. But the last remaining major networks, EE and Vodafone, have now pulled out of their agreements with the retailer.

O2 and Three had already pulled out earlier this year. "If mobile network operators decline to supply us, we do not have a business," Phones 4U boss David Kassler told the BBC, after EE cancelled its contract with the chain on Friday.

Stefano Quadrio Curzio, of Phones 4U's owner BC Partners, blamed Vodafone in particular, claiming the network's "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."

But a Vodafone spokesperson told CNET today that "we strongly reject any suggestion that we behaved inappropriately at any stage during our negotiations with Phones4U," blaming the decision to pull out on the retailer's failure to come up with a "commercially viable" agreement.

A Phones 4U spokesperson has since fired back, telling The Telegraph, "This is a shoddy way for Vodafone to deflect attention from their actions."

The decision by networks to pull out of third-party retailers is motivated by a desire to cut costs as European legislation and the UK's healthy competitive market squeeze profits. Each network has its own chain of high street stores so doesn't rely on sales from partners.

Founded in 1996 by John Caudwell, Phones 4U is now owned by private equity firm BC Partners, which acquired the chain in 2011 in a £610m (€770m) deal. PwC is expected to be appointed as administrator for the troubled business, and will make a decision on whether stores can re-open.

Phones 4U staff have been told to turn up to work today and will continue to be paid for the moment. Dixons Carphone, the parent company of rival chains Carphone Warehouse, Currys and PC World, has stated on Twitter that it "will be opening up discussions with the administrators to agree what we can do" about securing the future of Phones 4U staff working on "shop-in-shop" Phones 4U stands in branches of Currys and PC World.

If Phones 4U does join Comet in oblivion, that would leave Dixons Carphone stores the last technology shops standing on the high street.

Samsung, which has Samsung Stores in partnership with Phones 4U, says it is "business as usual" at the Samsung Experience Store in Stratford's Westfield shopping centre, and is looking for a new retail partner.

The Phones 4U website is currently offline, with a message informing customers that "Following the unexpected decision of EE and Vodafone to withdraw supply from Phones4U, we regret that we are offline. Please accept our apologies and we will update you as soon as possible." Under a list of customer service numbers, the message is signed by "The heartbroken Phones4u Team."

Existing contracts will continue unaffected, but phones that have not yet been dispatched will not be sent out and orders will be refunded. That includes orders for a new iPhone 6 or 6 Plus over the weekend, ahead of the new phones hitting shops this Friday.

If you're worried about your order or your contract, you can contact Phones 4U customer service on 0844 8712253.

At this stage it's also unclear what will happen to customers of Phones 4U's own network Life Mobile.

This story is being continually updated throughout the day as we learn more.