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UK’s Phones 4U goes into administration



The Maharajah of Sydney

The Maharajah of Sydney

Well-known member
Jul 7, 2003
1,366
Sydney .
This will leave a bit of a hole in your British High Streets

UK’s Phones 4U goes into administration threatening 5596 jobs

The privately owned mobile phone retailer has announced overnight that it’s going into administration.
The chain, which is owned by private equity firm BC Partners, said its 550 stores would all be closed today (Monday).
Phones 4U blamed mobile network EE’s decision not to renew its contract for the move, which came after Vodafone recently made a similar decision.
 
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El Presidente

El Presidente

The ONLY Gay in Brighton
Helpful Moderator
Jul 5, 2003
39,713
Pattknull med Haksprut
Tricky Dicky said:
Difficult to understand how a business that had £110m in profits last year can go tits up just because they lose their networks. Seems like there might be something dodgy here, why would the networks not renew ?
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Because customers would then have to go to the networks own shops and pay higher prices. Whilst P4U was pretty rubbish, it did allow punters to compare tariffs, which the networks don't like.
 


father_and_son

father_and_son

Well-known member
Jan 23, 2012
4,646
Under the Police Box
Tricky Dicky said:
Difficult to understand how a business that had £110m in profits last year can go tits up just because they lose their networks. Seems like there might be something dodgy here, why would the networks not renew ?
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There is a legal obligation on the Directors to only continue trading if the business is a "going concern". Given they have lost the support of Vodafone and EE it is right that they have ceased trading, although doing it on a Sunday night smacks of being c*nts. They could have stayed on this week to fulfill existing orders/obligations and given the staff an extra week before closing on friday (provided their was sufficient cash - but given that its privately owned I suspect the owners have pulled the plug with no regard to customers or staff in order to extract the most cash from the business).
 


EDS

EDS

Banned
Nov 11, 2012
2,040
father_and_son said:
There is a legal obligation on the Directors to only continue trading if the business is a "going concern". Given they have lost the support of Vodafone and EE it is right that they have ceased trading, although doing it on a Sunday night smacks of being c*nts. They could have stayed on this week to fulfill existing orders/obligations and given the staff an extra week before closing on friday (provided their was sufficient cash - but given that its privately owned I suspect the owners have pulled the plug with no regard to customers or staff in order to extract the most cash from the business).
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They had no choice but to close, if you sell one product and the supplier stops selling you that product you have no business anymore. The below is an extract from an interview in the Guardian.

Phones 4u will update its staff at meetings in store and at its headquarters on Monday, and BC insisted: "Employees will continue to be paid until further notice."

The retailer has pledged to refund customers in full for any orders that have not yet been dispatched.
 




Justice

Justice

Dangerous Idiot
Jun 21, 2012
18,660
Born In Shoreham
father_and_son said:
There is a legal obligation on the Directors to only continue trading if the business is a "going concern". Given they have lost the support of Vodafone and EE it is right that they have ceased trading, although doing it on a Sunday night smacks of being c*nts. They could have stayed on this week to fulfill existing orders/obligations and given the staff an extra week before closing on friday (provided their was sufficient cash - but given that its privately owned I suspect the owners have pulled the plug with no regard to customers or staff in order to extract the most cash from the business).
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Bit harsh that without personally knowing all the facts.
 




wakeytom

wakeytom

New member
Apr 14, 2011
2,718
The Hacienda
Tricky Dicky said:
My point was more abstract than the minutiae of going in to admin - it was more along the lines of 100m profit one minute, out of budiness the next ??
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Because there is no business, if you have limited suppliers in your industry and they all decide not to sell to you then what can you sell?

Given the changes in the way people buy goods this does not come at a huge surprise but mainly I feel for the people that may be affected by this.
 




wakeytom

wakeytom

New member
Apr 14, 2011
2,718
The Hacienda
El Presidente said:
Because customers would then have to go to the networks own shops and pay higher prices. Whilst P4U was pretty rubbish, it did allow punters to compare tariffs, which the networks don't like.
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I am not sure that is really 100% correct - the competition is between the networks and not middle men retailers, who can only offer lower prices based on discounts from the wholesalers, otherwise there would be no margin. I think you will see lower prices from the networks themselves going forward as they no longer have to discount so much to the middle man. You still have the same choice you had before, nobody has to have a mobile and you can still easily compare online
 


brightn'ove

brightn'ove

cringe
Apr 12, 2011
9,137
London
wakeytom said:
I am not sure that is really 100% correct - the competition is between the networks and not middle men retailers, who can only offer lower prices based on discounts from the wholesalers, otherwise there would be no margin. I think you will see lower prices from the networks themselves going forward as they no longer have to discount so much to the middle man. You still have the same choice you had before, nobody has to have a mobile and you can still easily compare online
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unlikely. Now that there is no middle man, the big network cartel can charge far more for the same contracts, have a look at EE's pricing for the new iPhone for example.
 






wakeytom

wakeytom

New member
Apr 14, 2011
2,718
The Hacienda
GOM said:
Oh I wish I lived in such a world as you.
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How can phones 4 u offer such "great prices" yet make so much profit? If the network are directly selling to customers then the demand for there direct sales will increase but there is no limit to how many they can sell other than the amount of phones been made as such the cost should drop.

If I am a wholesaler I chose who to do business with if I hold the power in the relationship - a very simple Porters force - who is to say that they wanted to increase prices at this review and phones 4 u decided it was not profitable to pay at that level meaning they could not strike a deal. Competition is actually increasing at the moment with supermarkets such as Tescos and other suppliers like Giff Gaff - yes I understand they rent network from O2 but it is a completely different pricing structure
 


H

HawkTheSeagull

New member
Jan 31, 2012
9,122
Eastbourne
Vodafone have hit back at Phones 4U by saying they decided not to renew as Phones 4U refused to negotiate in a new deal with them, so it certainly looks like only 1 company has itself to blame here.

It was always a risky business to run, the phone networks dont have to pay out to use Phones 4U, especially when only 10% of EE's sales are through them. It would be easier for EE just to not renew the contract and stick to its own stores and Carphone Warehouse/Dixons.
 






S

sten_super

Brain Surgeon
Jul 28, 2005
5,945
Cambridge, Cambridgeshire, United Kingdom
HawkTheSeagull said:
Vodafone have hit back at Phones 4U by saying they decided not to renew as Phones 4U refused to negotiate in a new deal with them, so it certainly looks like only 1 company has itself to blame here.

It was always a risky business to run, the phone networks dont have to pay out to use Phones 4U, especially when only 10% of EE's sales are through them. It would be easier for EE just to not renew the contract and stick to its own stores and Carphone Warehouse/Dixons.
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Telegraph reporting that Phones4U took a load of equity out of the company, replaced it with debt and then blamed created debt repayments for not being able to offer competitive terms to the network companies when re-negotiating deals. If true, very sad for the 6,000 workers, hope that the owners get shafted for as much as possible.
 


D

Danny-Boy

Banned
Apr 21, 2009
5,579
The Coast
Agh' when I was a star of their turgid advertising campain about 2008 (I think) filming at Newhaven and Seaford.. are those ads somewhere out there still on the net? Remember the Yank they had in a white suit fronting the campaign with his wrist contortion Phones - 4 - You. Ho bloody ho. Right prima donna he was, wouldn't mix with us "background artistes".
 




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