Phones 4U ceases trading after EE and Vodafone terminate contracts

Mobile phone retailer Phones 4U abruptly ceased trading over the weekend after confirming that UK operator EE decided not to renew its contract, which expires on Sept. 30, 2015.

The decision by EE comes only two weeks after Vodafone UK said it was dumping Phones 4U as one of its retail partners, and represents a catastrophic development for the retailer: the connections procured under the network agreements with Vodafone and EE currently represent more than 90 per cent of its total connections.

The jobs of 5,596 employees in 550 standalone stores are now at risk in the UK. Phones 4U now has no network partners at all since Three UK and O2 UK had also previously cancelled their agreements with the retailer.

In a trading update filed with the London Stock Exchange, Phones 4U said it had resolved to cease trading with immediate effect and place the companies included within the Phones 4U group into administration. The companies listed also include the mobile virtual network operator (MVNO) Life Mobile, which used EE as its host network.

According to reports, Phones 4U has asked PricewaterhouseCoopers to act as its administrator and expects the appointment to happen on Monday. The company's web site is now offline.

EE confirmed it has taken the decision not to extend its retail contract beyond September 2015, saying the move is in line with its strategy to focus on growth in its direct channels "and to move to fewer, deeper relationships in the indirect channel." The operator also noted that developments in the marketplace "have called into question the long-term viability of the Phones 4U business."

"We will monitor developments and work to provide any necessary support for customers who joined EE through Phones 4U," EE added.

Vodafone UK said earlier in September that it would not be extending its contract with Phones 4U after the agreement expires in February 2015. The operator said it instead planned to enhance its distribution partnership with Dixons Carphone, the new consumer electrics retailer formed through the recent merger of Carphone Warehouse with Dixons Retail.

For more:
- see this Phones 4U trading update
- see this Bloomberg article

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