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.
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.”
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.
New undercover research carried out by Which? revealed that the vast majority (82 %) of staff in mobile phone shops they visited gave incorrect information about potential price rises on ‘fixed’ phone contracts at the point of sale.
Astonishingly, 82% of shop assistants maintained that the price was fixed even when asked if it would stay the same throughout the length of the contract. All shop assistants, when prompted, claimed that the features will stay the same throughout the contract.
Which? recently launched the ‘Fixed Means Fixed’ campaign, which has already received almost 20,000 pledges of support from consumers, calling on phone companies to ensure that the price, and all aspects of fixed deals, remain the same for the full length of mobile phone contracts.
In the past year, four out of the five main phone operators have taken advantage of a hidden clause that allows them to increase prices on contracts that appear to be ‘fixed’, a practice potentially netting the industry up to £90m in a year.
Which? executive director, Richard Lloyd, says: “It’s totally unacceptable that people aren’t being told the full story about potential price rises when signing up to contracts in mobile phone shops. Shockingly, even when we asked directly about price increases, the vast majority of staff denied this could happen.
“There should be no nasty surprises after signing a mobile contract. People must be confident that fixed really does mean fixed.”
Recent Which? research found that 70% of people on fixed contracts did not know that mobile phone companies could increase prices during the length of their contract.
The Which? Fixed Means Fixed campaign is calling on operators to advertise upfront the possibility of price rises and, if prices do increase, to allow people to switch contracts without penalty. Which? has also complained to the regulator, Ofcom.
The havoc continues for several minutes until one member of staff makes a call from his mobile phone and shopping centre security staff arrive at the store shortly afterwards.