High street smartphone retailer Phones4U has officially entered administration this week, after Vodafone and EE expressed desires not to negotiate new contracts with the company.
The retailer, which has now pulled all of its online services down employs over 5,000 people in 550 high street stores is now likely to go out of business altogether, unless administrators find a way to keep the business afloat.
This could signal the end of formerly one of the most successful mobile phone retailers here in the UK alongside Carphone Warehouse.
Staff have been asked by the company to show up as normal today (Monday), where they will be briefed by managers, but stores won’t be opening as usual.
It’s expected that all in-store and online staff will be without a job by the end of the week, however it remains unknown if any redundancy packages will be made available.
The retailer made approximately £100m over the last year, but the move by carriers to pull out of deals with the company ultimately made the decision for executives in the Phones4U head office.
Vodafone and EE were the only carriers working with the retailer, and with talks breaking down with both networks, Phones4U was left with few alternative options.
Shares in Dixons/Carphone rose by 4% after the news broke about the issues surrounding Phones4U, and leaves Carphone as the only major high street retailer for smartphones on multiple networks.
Phones4U was originally set-up in the mid-80s, and sold in 2006 for £1.5bn when the company was selling just under 30 mobile phones a minute.
It reportedly made £2.25bn sales before it was sold and employed approximately 10,000 staff, only to see business slow down in recent years.
Other businesses like DialAPhone, which are also ran by Phones4U are also ceasing to trade, and show a standard customer message when trying to gain access to its website, as is the case with the main retailer's website.
EE released a statement this week claiming that its deal with Phones4U had been called into question, confirming that its contract with the retailer wouldn’t be renewed beyond September 2015.
Vodafone had also previously released a statement claiming that its agreement with Phones4U wouldn’t be extended past February 2015, as it was opening more of its own high street stores and enhancing its deal with Dixons/Carphone.
Vodafone accounted for over a quarter of all contract sales by Phones4U, whilst almost 20% of its Pay as you Go deals were also made through Vodafone.
The news for Phones4U customers is mixed, with carriers fulfilling contracts which have already been taken out with the retailer.
Contracts which haven’t been shipped yet however won’t be getting fulfilled, with customers receiving a full refund, meaning any iPhone 6 or iPhone 6 Plus deals made with the retailer will be getting rebuffed.
At the time of writing customer service phone lines for the company are still up and running, but won’t be selling phones, rather dealing with customer enquiries about contracts or refunds, along with technical support and insurance.
Phones4U customers who are unsure of their position in their contracts should contact the retailer via phone on 0844 871 2253.
Written by Luke Hatfield