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Phones 4u Vodafone EE

Vodafone and EE in talks with Phones 4u administrator over assets purchase


By John McCarthy | Opinion editor

September 17, 2014 | 4 min read

Vodafone and EE are in talks to acquire Phones 4u assets such stores, staff and stock, after the firm entered administration on Monday.

550 Phones 4u outlets are in question

The mobile networks, which irreparably damaged the firms' business model after pulling out of agreements earlier this month, are now in discussions with administrators to purchase parts of the Phones 4u business - news which will provide hope for the 6,000 employees whose jobs are at risk.

The mobile-contract sales group’s administrator, PwC, has reported that it has secured enough funds to pay staff today (Wednesday 17 September).

However, it added that it will be laying off workers and discontinuing sectors of the firm throughout the week as it has no contracts to offer consumers, leaving the Phones 4u brand with no option but to remain clsoed.

Rob Hunt, one of the three joint administrators, announced that four major UK groups have shown an interest in Phones 4u - less than 24 hours after its demise.

Networks, Vodafone and EE were in separate discussions despite the Phones 4u founder, John Caudwell, on Tuesday accused the "ruthless" mobile operators of collaborating to force the business to close by withdrawing their contracts without notice.

A Vodafone spokesman told the Financial Times: “We can confirm that we have been approached by the administrators of the Phones4u business. We will not be commenting on the detail of those discussions."

Professor Andre Spicer, of Cass Business School, said: “Vodafone and EE have come out as winners as they have eliminated a competitor in retail, gained some plum locations and paid very little in the process. Consumers are unlikely to abandon the brand though as many are locked into contracts and can't be bothered to change providers when their contracts come up.

"The main losers will be investors who bought bonds in the company and employees - the great majority of whom will find themselves out of a job."

“The business carried huge supplier risks. It was like a shop only selling three products. If one supplier pulled the plug, you would be left with bare shelves. Phones 4u had few ways it could decrease this risk. There were no alternative suppliers to turned to."

Spicer added: "This is typical of many companies in the UK economy where a combination of financiers and big corporations which dominate an industry get the rewards while employees and everyday investors are shouldered with the losses.”

The newly formed Vodafone partner Dixons Carphone, is also reported to be in talks to offer 800 staff concession stands within its own premises, as the industry’s “no-poaching” agreement is no longer in effect.

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