Vodafone slams Phones 4u management over retailer’s collapse

Phones 4u, owned by BC Partners, collapsed into administration on Monday, putting 5,596 jobs at risk across its 720 stores and concessions.

EE followed Vodafone and O2 by pulling its support from Phones 4u.

Vodafone said negotiations regarding renewing its contract with Phones 4u collapsed because the retailer was unable to offer competitive terms, because of its debt repayment obligations.

A Vodafone spokesman told The Telegraph: “Phones 4u was offered repeated opportunities to propose competitive distribution terms to enable us to conclude a new agreement, but was unable to do so on terms that were commercially viable for Vodafone in the current UK market conditions.

“We were told by the Phones 4u management team that they had little commercial flexibility due to their debt repayment obligations, but that they had a number of alternative strategies in place if we couldn’t reach an agreement with them.”

On Radio 4 this morning John Cauldwell, founder of Phones 4u, alleged mobile phone operators “colluded” in bringing about an “unprecedented assassination of a business”.

On Monday Stefano Quadrio Curzio of BC Partners blasted Vodafone, and said the mobile phones giant had “acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4u over more than six months”. He added that Vodafone’s action “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”, he added.

A Vodafone spokesman said: “Phones 4u was offered repeated opportunities to propose competitive distribution terms to enable us to conclude a new agreement, but was unable to do so on terms which were commercially viable for Vodafone in the current UK market conditions.

“We were told by the Phones 4u management team that they had little commercial flexibility due to their debt repayment obligations, but that they had a number of alternative strategies in place if we couldn’t reach an agreement with them.”

Phones 4u’s debts include £205m in bonds placed by Phones 4u on the Irish Stock Exchange last September. According to The Telegraph, BC Partners immediately took the cash raised by the placing out of the bonds, known as Payment-in-Kind toggle notes, out of the business as a special dividend.