Phones 4U brand at risk as administrators called in
The Phones 4U brand and the jobs of its marketing team are at risk after the mobile phone retailer was put in to administration.
Its 550 stores are closed today (15 September) and its website has been taken offline.
The move follows mobile network EE’s decision on Friday (12 September) to end its contract with the retailer, a move that follows Vodafone’s decision to do the same earlier this month. O2 decided to stop offering its mobile network to Phones 4U customers last year.
Phones 4U chief executive David Kassler explained owner BC Partners’ decision to place the brand into administration in stark terms.
“If mobile network operators decline to supply us, we do not have a business.”
In a statement, EE implied the decision to cut ties was related to rival Vodafone’s call. It says the decision was “driven by developments in the marketplace that have called into question the long-term viability of the Phones 4U business.”
It adds the decision to end its contract a year early also reflected its strategy of focusing on direct sales channels.
Administration puts about 5,590 jobs at risk including its marketing team, which is led by CMO Scott Hooton and marketing director Ben Padley.
Neil Saunders, managing director of Conlumino, described losing EE as a “disaster” for Phones 4U following the loss of Vodafone and O2.
“In isolation these losses are very serious, not least because the contracts have significant revenue attached to them that needs to be replaced. However, replacing that revenue becomes all the more difficult given that Phones 4U will become a less compelling destination for consumers because it is unable to offer contracts with the major mobile players.
“This, in effect, means that its business model is no longer viable.”
He adds Phones 4U could now look to “beef up” agreements with smaller operators or push its own Life Mobile service more aggressively but that would require resources that will be difficult to find if it is brought out of administration.
“They [the options above] would also require a rethink of how the business works with, for example, much higher levels of marketing being required to achieve reasonable penetration of its own brand. The number of stores would also need to be reduced.”
Anybody looking to buy Phones 4U will have to rebuild a brand that was suffering from negative perception even before administration. It currently sits bottom of YouGov Brand Index’s Buzz rankings of 38 retailers with a score of -0.7 and was only in 27th spot a year ago.
The retailer launched a multimillion campaign in July to highlight the knowledge of its staff, a shift away from its usual product and price-based campaigns.
It made a move into stadium sponsorship last year, buying the naming rights of the Manchester Arena , an arrangement now in question.
