back to article Report: EE in talks to scoop up 60 Phones 4u stores from troubled High Street retailer

EE is reportedly the latest company to pick over the carcass of stricken British High Street mobile phone retailer Phones 4u, which fell into administration late last week. According to the Sunday Times (£), EE has until tonight to secure a deal to buy 60 stores from Phones 4u. The move comes after rival mobile network …

  1. Furbian
    Flame

    "pick over the carcass"

    Quite literally, maybe they all pulled out from their deals with Phones 4u a few weeks ago precisely so they could pick up the stores on the cheap. Quite like someone doing a lot of hard work in introducing someone to a client they have good relationship with, only for the introduced party to go around the chaps back and make a deal with the client themselves, i.e. cut out the middle man. The ones who pay the price in this case are the workers left without a job. Naked capitalism as its worst, though I'm no advocate of communism either (i.e. DPRK, no thanks).

    1. StimuliC

      Re: "pick over the carcass"

      Well it certainly seems that way. It does seem to indicate that there may have been collusion between the carriers to drive Phone 4U into a crisis or collapse and then like carrion pick over the dead business selecting the parts that they had coveted ie the retail locations and the already 'trained' staff who know how to sell devices to customers.

      That the trouble with 3rd party outlets for phone companies they have to compete against the companies that they have 'deals' with and those carriers don't like having competition and don't like having potential customers have a 'choice' of carriers in a single location. They want all customers that enter to only see devices that they carry and devices plans and pricing that they dictate.

    2. Anonymous Coward
      Anonymous Coward

      Re: "pick over the carcass"

      +1 Furbian

      "The unacceptable face of capitalism"

      I smell a cartel.

      1. Destroy All Monsters Silver badge

        Re: "pick over the carcass"

        On the other hand, Phones4U has no god-given (or govt-mandated) right to play as an intermediary of the carrier and the customer.

        It may exploit a niche for some time, but niches have the nasty tendency to close.

        "Capitalism" is not about preservation.

  2. Anonymous Coward
    Anonymous Coward

    Phone networks showing their true colours.

    I wouldn't suprise me if this wa engineered from the outset. The UK phone networks are acting like the US networks.

  3. James 100

    Funny, that ...

    they pull the plug on it, then happen to be standing ready to buy up the useful bits for themselves... How convenient.

    My brother just got a good deal on a new handset with Vodafone through Carphone Warehouse, after shopping around, so they can still be useful - but with all the overhead involved, I'm surprised Vodafone couldn't offer a better deal directly online.

  4. Bob Vistakin
    Facepalm

    Still puzzled

    Why no-one mentions Life mobile. It wasn't enough for Phones4U to pointlessly stick themselves in between the customer and the carrier, they had to greedily become a carrier themselves as well. Backed by EE, I see - the last of the biggies to give them the elbow.

    Am I alone in seeing this as the only possible outcome?

  5. paulf
    Holmes

    And there were no other buyers for the stores in question?

    FTA: "It's been alleged to the Sunday Times by anonymous sources close to Phones 4u's private equity owner BC Partners that the carriers "had engineered the retailer's demise so they could cherry-pick its best store on the cheap.""

    This makes the rather big assumption that the stores could only be sold to another mobile phone retailer. On that I call bollocks. I understand there isn't much demand for shops these days (unless you're a pound shop, charity shop or a bookies) but if there was demand out there the networks wouldn't be the only buyers and would have to offer a competitive purchase price. If there was little demand, the networks would have had their pick of other empty units on the high street without buying the former P4U stores.

    The only thing making these shops attractive to the networks is that they are already established as mobile phone shops and come with staff that would already be familiar with the products but that alone wouldn't make the networks the only buyer.

  6. paulf
    Facepalm

    Complicit but not convinced the networks are to blame

    I'm no fan of the networks (they can do their own excuse making) but from a dispassionate read around this subject two things stand out:

    1. The business, which was already holding significant senior debt, was loaded with £200m of junior debt in autumn 2013 which was paid out immediately to the Private Equity owners as a special dividend. I suspect this was secured on the business with no recourse to the owners so i) the interest rate would have been [relatively] punishing and ii) the PE boys could just skip away without penalty when it all went kaboom. If there was a viable business worth investing in the £200m would have been invested in it, or not borrowed at all to keep the cost base as low as possible. The business was bought by the current owners for £700 but had almost that in debt when it went into Administration.

    2. The networks claim P4U wanted a margin twice that demanded by Carphone, citing interest payments on debt loaded on the business as the reason. There may be some variance between high street retailers and allowing a slightly bigger margin may have been desirable so the networks weren't left with just Carphone on the high street but it isn't for the networks to significantly increase their cost base as a consequence of the funding/ownership structure of P4U.

    The networks may have a smoking gun in their hands, but the gun was loaded, passed to them, and the trigger pulled by the Private Equity boys (who I bet have handsomely enriched themselves from this whole affair while happily blaming their suppliers for the whole mess).

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like