Administrators PwC said 887 jobs for shop employees across the UK would be preserved.The stores will be rebranded as Vodafone stores over the coming weeks.
However, 628 employees at Phones 4U head office in Newcastle Under Lyme are losing their jobs.
The administrators said the “need to cut costs in the business” had led to the decision to reduce numbers at the company’s headquarters.
At the head office 400 employees are being retained to work on managing the restructuring process.
“It is with great sadness and regret that we have today made the difficult decision,” said Rob Hunt, joint administrator and PwC partner.
Dixons Carphone has already agreed to take over more than 800 staff working at Phones 4U concessions within their Currys and PC World outlets. PwC said the deal with Vodafone represents value for Phones 4U’s creditors.
“We have worked rapidly over the course of the week following our appointment to explore interest in the Phones 4U business and we are very pleased to secure a future for a significant number of stores and continued employment for 887 of the Phones 4U people,” said Mr Hunt.
The deal with Vodafone is subject to court approval. PwC said there would not be an announcement of which stores were being transferred until after the court process which is scheduled for Monday.
Many have resorted to deleting photos, videos and other files in order to free up space for the new version of Apple’s mobile operating system, iOS8, which requires up to 5.8GB of storage.
Apple has also removed apps for its new health software because of a bug.
One expert said Apple’s updates were often prone to “teething problems”.
Some vexed Apple users took to Twitter to express their annoyance, at one point causing the subject to be trending above the Scottish referendum.
David Roberts tweeted: “This update would be great… If you didn’t have to delete half of the stuff on your phone just to install it.”
Daniel Zennon took a more humorous approach, tweeting: “So Apple put the #U2 album on everybody’s phone and then tell them they don’t have enough space for the #iOS8 upgrade”.
This is not the first time Apple users have had trouble with iOS updates. In 2012, the iOS6 update caused some users to lose their apps, and others lost photos and messages when updating to iOS7 last year.
As well as requiring a lot of storage, the latest version, iOS8, does not include apps that run with Apple’s new HealthKit service, which is designed to work with third-party wearable health devices.
The software was originally scheduled for release in iOS8, but has been pulled while Apple works on fixing a bug.
David Price, online editor at Macworld UK, said the issues were not “really a surprise”.
“There’s always a rush on the servers on launch day, some delays, and usually some teething problems,” he said. “That’s why we always recommend that people wait a day or two before updating.”
Apple users can avoid the need to free up storage space for the latest update by upgrading their software via iTunes on a Mac or PC, instead of through the phone or tablet itself. Additionally, much of the free space required by the update is made available again once the installation process has completed.
Phones 4U set up the shops-within-a-shop at Dixons-owned Currys and PC World before the merger between Dixons and Carphone Warehouse was announced.
The 160 concessions were due to end next year as Carphone Warehouse and Phones 4U were competitors. The Phones 4U business went into administration on Monday.
The move put 5,596 jobs and more than 700 outlets at risk, and came after Vodafone, EE and O2 did not renew their contracts with the company.
Dixons Carphone said via Twitter that it had secured an agreement to offer jobs to Phones 4U employees who work in concessions in its stores. Separately, mobile phone network operators Vodafone and EE are in discussions to buy parts of stricken retailer Phones 4U, sources say.
Phones 4U blamed its decline on EE’s decision not to renew its contract. This followed a similar move from Vodafone earlier in September. Accountancy firm PwC was appointed to see if any of the 560 stores and 160 concessions could be re-opened or sold. As well as Vodafone and EE, overseas operators with an eye to entering the UK market have expressed an interest.
In an e-mailed statement, Vodafone said: “We can confirm that we have been approached by the administrators of the Phones4U business.” EE and PwC declined to comment. The Financial Times first reported the network operators’ discussions late on Tuesday.
John Caudwell, the founder of Phones 4U, has blamed the demise of his former company on the “ruthless actions” of “predatory” mobile phone networks.
Phones 4U said it had been a profitable business, with turnover of £1bn, underlying profits of £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.
This was an “unprecedented assassination”, Mr Caudwell said on Tuesday. The mobile firms rejected his claims.
Mr Caudwell sold Phones 4U to Providence Equity and Doughty Hanson for £1.5bn in 2006. The retailer, now owned by private equity firm BC Partners, has said established mobile contracts taken out through Phones 4U will not be affected, although phones ordered and not despatched – for example anyone ordering the new iPhone 6 over the weekend – would be.
Some users had complained about the fact that Songs of Innocence had automatically been downloaded to their devices without their permission.
It had not been immediately obvious to many of the account holders how to delete the tracks. The US tech firm is now providing a one-click removal button.
“Some customers asked for the ability to delete ‘Songs of Innocence’ from their library, so we set up itunes.com/soi-remove to let them easily do so. Any customer that needs additional help should contact AppleCare,” spokesman Adam Howorth said.
Users who remove the album and do not download it again before 13 October will be charged for the 11 tracks if they subsequently try to add them again.
“It’s embarrassing for Apple that it’s had a bit of a backlash,” commented Ian Maude from the media consultancy Enders Analysis. “It was giving something away to its customers – so that part was really good – but what it should have probably done was make it optional. Not everybody’s a U2 fan as it’s just discovered. Is there any long-term impact? No. It’s moved very quickly to fix the problem.”
Apple made the album available to about 500 million iTunes customers in 119 countries to coincide with its iPhone 6 and Watch launch event last week.
U2’s singer Bono acknowledged at the time that not everyone would appreciate the gift. “People who haven’t heard our music, or weren’t remotely interested, might play us for the first time because we’re in their library,” he wrote on the band’s site. “And for the people out there who have no interest in checking us out, look at it this way… the blood, sweat and tears of some Irish guys are in your junk mail.”
Bono added that Apple had “paid” for the giveaway, and reports have suggested that prime placement of banner ads publicising the album on the iTunes store and other publicity provided by the tech firm might be worth as much as $100m (£62m).
Sales of earlier U2 albums have re-entered iTunes’ charts and the band has also raised its profile ahead of an expected tour as well as a planned follow-up album called Songs of Experience. The new tracks on Songs of Innocence have, however, split the critics.
The Drowned in Sound site suggested that U2 no longer had it in them to make a great album, adding that giving away songs for free had “somewhat devalued a record that cost six years of their lives and a lot of money to make”.
But Rolling Stone magazine gave the album its maximum score, saying that it was “a triumph of dynamic, focussed renaissance”.
The company says that any existing discount deals will still be honoured. Some customers receive a £5 discount each month.
Clearly, customers will still have a decision to make about where to take their custom when their contract expires.
What about phone insurance policies?
Again, these policies will be honoured. Anyone who needs to make a claim if, for example, their phone has been stolen will still be able to do so, with staff still available to take these calls on 0844 8710535.
What happens if a phone has been ordered from Phones 4U?
The company says that any phones that have been ordered and sent out can be used as normal by customers. However, orders of phones yet to be dispatched will be cancelled and refunds automatically paid to customers.
Phones 4U customer services remain operational and available on 0844 8712253, the company adds. Customers whose phones are being repaired can call 0844 8712269. Their repairs will be completed with the phone being sent back to their home address rather than a store.
This 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.
In a statement, PwC said: “Our initial focus will be to quickly engage with parties who may be interested in acquiring all or part of the business, and to better understand the financial position and options for the company. The stores will remain closed while we have these conversations. “We will also be talking to network operators and suppliers, and trying to access funds to pay for the costs of the business, including wages. These conversations will determine whether we can re-open stores and trade, and also if and when we can pay the arrears of wages to employees. Our hope is that we will be able to pay all the outstanding wages arrears.”
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”.
EE, Vodafone and 02 all have around 500 stores across the country, broadly the same same sized network of stores that Phones 4U has, and sell directly to customers through these.
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”
Analyst Rahul Sharma, from Neev Capital, said the network operators own businesses were under pressure and the companies were trying to shore up their profits. He also pointed out the EU has put pressure on their charges, most recently stamping down on roaming costs.
Professor Andre Spicer, from the Cass Business School, said customers had less need of high street phone shops in any case: “Currently the networks are asking how they can take over more of the supply chain so they can reap a greater percentage of the profit created.
“Consumers are no longer scared of smart phones. This means they are less in need of a sales person to walk them through the purchase. Instead, they are likely to be happier buying devices online. This leaves retailers with less space for growth.”
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.”
But in a statement, Vodafone said it had been in negotiations with the high street chain for months: “We strongly reject any suggestion that we behaved inappropriately at any stage during our negotiations with Phones 4U.
“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.”