Staff across Phones 4u’s 22 North East stores face an uncertain future as the mobile phone retailer is poised to enter administration.
Some 157 workers at the firm’s regional stores and concessions are waiting to learn of the retailer’s fate, as speculation mounts that rival Dixons Carphone might offer some jobs.
On Monday Dixons Carphone chief executive officer Sebastian James tweeted: “We are working out what we can do quickly for p4u colleagues.”
Over the weekend, high street chain Phones 4u revealed EE had not renewed its supply contract, leaving it with no network partners after Vodafone made a similar move earlier this month.
Phones 4u’s board said it had no other choice than to seek administration following the move, despite stating a turnover of more than £1bn in 2013 and significant cash in the bank.
All the firm’s stores will be closed pending a decision by administrators PwC as to whether the business can be reopened for trading.
David Kassler, chief executive of Phones 4u, said: “Today is a very sad day for our customers and our staff. If the mobile network operators decline to supply us, we do not have a business. A good company making profits of over £100m, employing thousands of decent people has been forced into administration.
“The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise. The ultimate result will be less competition, less choice and higher prices for mobile customers in UK.”
Stefano Quadrio Curzio, representative of Phones 4u’s owners, BC Partners, hit out at EE’s actions.
He said: “Our overriding concern is for all the dedicated hard-working employees of Phones 4u at a time of uncertainty for the company.
“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.
“EE’s decision on Friday is surprising in the context of a contract that has more than a year to run and leaves the Board with no alternative but to seek the Administrator’s protection in the interests of all its stakeholders.”
North East retail consultant Graham Soult explained the mobile phone market had become a lot more complex in recent years, and growing emphasis on the network as a brand had altered consumer’s relationships with their mobile phone provider.
He said: “Increasingly its about the network as an experience and the marketing of that has become a lot smarter. I think consumers have a lot more attachment to their network now.
“Networks want to hang on to their customers from the start, and that means going to them direct. It makes a lot of sense for their margins, but unfortunately that makes it tricky for business models like that of Phones 4u.”
Mr Soult added: “Naturally this recent news is dreadful for Phone 4u’s staff who are facing possible redundancy through no fault of their own. That said, if you look at closure of Woolworths, with 27,000 job losses, the retail environment has bounced back. There are still a lot of great retailers doing well, and many more opening stores.
“There is still a demand for skilled retail people.”
Phones 4u operates stores in Newcastle, Metrocentre, Ashington, Darlington, Chester-le-Street, Wallsend, Cramlington, South Shields, Gateshead, Middlesbrough, Redcar, Peterlee and Washington.
The firm also runs concessions in branches of Currys in Newcastle, Gateshead, North Shields, the Metrocentre and Darlington.
Phones 4u, which is owned by private equity firm BC Partners, has 550 standalone stores nationwide, employing 5,596 people. O2 and Three also withdrew their products from Phones 4u earlier this year.
Shares in the newly formed Dixons Carphone rose by 2.28% to 380p on the news