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Phones 4U shops closing for business

Retailer Phones 4U has gone into administration putting 5,596 jobs at risk.

The chain, which is owned by private equity firm BC Partners, said its 550 stores would all be closed on Monday.

Phones 4U blamed the move on mobile network EE's decision not to renew its contract, which followed a similar move from Vodafone earlier in September.

"If mobile network operators decline to supply us, we do not have a business," said Phones 4U boss David Kassler.

The company said established mobile contracts taken out through it would not be affected, although phones ordered and not despatched - for example anyone ordering the new iPhone 6 over the weekend - would be. A customer service line will be open from Monday at 09:00.

Continue reading the main story “Start Quote

The ultimate result will be less competition, less choice and higher prices for mobile customers in the UK”

End Quote David Kassler Phones 4U

It also said staff should turn up to work as normal, when they would be given further details and staff would "continue to be paid until further notice".

A spokesperson for EE said the decision not to renew its contract with Phones 4U was "driven by developments in the marketplace that have called into question the long term viability of the Phones 4U business".

The spokesperson added that the decision was also "in line with our strategy to focus on growth in our direct channels".

BC Partners said EE's contract was due to expire next September, a full year from now.

It warned "the ultimate result will be less competition, less choice and higher prices for mobile customers in the UK"

line Business editor Kamal Ahmed writes:

The collapse of Phones 4U is about much more than the demise of a high street chain that sells mobile phones and the possible sad loss of thousands of jobs.

According to the profitable retailer, it is actually about a reduction in competition.

Mobile contracts for consumers will now - even more - be dominated by the mobile operators themselves direct selling to customers.

Sources at Phones 4U say that Dixons Carphone is now the only major place when customers can get comparisons between operators. And that, as far as Phones 4U is concerned, is not a good thing.

line 'Sad day'

Mr Kassler, chief executive of Phones 4U, said it was a "very sad day" for both customers and staff.

"A good company making profits of over ?100m, employing thousands of decent people has been forced into administration," he added.

The firm said EE and Vodafone's decisions not to renew their contracts had come as "a complete shock".

Phones 4U said it had only received EE's decision late on Friday.

Stefano Quadrio Curzio, from BC Partners, said: "Vodafone has acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4U over more than six months.

"Their 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.

"The company is in a healthy state and both EE and Vodafone had, until very recently, consistently indicated that they saw Phones 4u as a long-term strategic partner."

PwC, which is expected to be appointed as administrator on Monday, will decide on whether the business can continue to trade.

Phones 4U was set up by the entrepreneur John Caudwell in the middle of the 1980s and sold for ?1.5bn some 20 years later.

Phones 4U said it had been a profitable business, with turnover of ?1bn, underlying profits ?105m in 2013 and plenty of cash in the bank, but that without the contracts from the phone networks it no longer had a business.

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