News today of Phones4u one of UK's most renowned mobile phone shops with over 550 shops (5600 employees) in the UK has gone into administration was simply put a shock to many.
I for one will miss them, I have never used them the shop was a great place to see, touch, sample and play with new phones before you buy them as they had all the phone types on display most of the time. One should not forget their good pay as you go deals and the availability of all kinds of sims, topups..etc.
I know some will probably rejoice as they are well known for their well lets say "not totally straight forward" sales tactics.
Thank god ay pre-orders or non delivered items will be refunded to their customers otherwise many iPhone 6/6+ will be left guttered and out of pocket!
They didn't "go under" from lack of customers, they went under as all the uk networks stopped them from selling there contracts, they seemed to have pissed them all off one way or another.
But they still made nice fat profits last year etc
Anyone who's worked at a company taken oven by equity management has a pretty good idea what went wrong lol
Yes indeed, they did not lack customers, they actually made a £100million profit last year.
As others said, they simply no longer had anything to sell. O2 pulled out last year, this year Vodafone and EE (Orange & T-Mobile) also pulled out which left them with Only Virgin mobile, an offering which did not give them enough to continue being in business. No product = dead business!
While I feel sorry for their staff potentially losing their jobs, I never liked their heavy-handed sales tactics where someone would pounce on you the moment you set foot in the shop and not leave you alone and let you browse in peace.
That said, the last time I was in an 'EE' shop it was almost impossible to attract someone's attention as they were so understaffed so I'm not sure what's worse.
Its always sad when 5000 people lose there jobs through no fault of there own, a few big headed idiots up at head office where drunk on there own importance and have bought down a profitable company.
it seems these equity management companies will never learn, buy a company, fire all the managers, bring in there own 'team' with (usually) no experience in that sector, and they totally screw things up, but of course still get paid there huge bonus's, while everyone else is screwed over.
This has a been due for a very very long time. I used to work for one2one / t-mobile, waaaay back in 2001-2005 .. Even then the the phone companies were working on ways to sell their contracts directly and cut out the middle med such as p4u . I worked on the website, online billing and point of sale stuff, the push was to get customers directly dealing with the phone company. The problem then was that there were still people without mobiles so any method of getting them signed up was ok.
These days the market is saturated, it's about retention and cost cutting so dropping middlemen makes perfect sense.
I think wrong company for a leveraged buy-out. Despite being still profitable it was not a long term cash cow to justify the debt taken on - people using online advice more, buying more direct from the carriers etc. Then the carriers themselves became uncertain of their viability and pulled the plug. Meanwhile the money borrowed against the company has been used elsewhere...
not sure it had anything to do with the networks being worried about there viability etc as they where still making a lot of money. They will always need high street shops to sell there wares and if someone else wants to take on the huge costs of that then all well and good. None of them have pulled the plug on carphone warehouse for instance
They where unable to negotiate new contracts with the networks, read into that what you will, the fact they had networks cancel with them last year and didn't manage to renew the contracts they still had tells you all you need to know, either totally incompetent managers, or they have a bigger plan eg phoenix company
"BC bought Phones 4u in 2011 for €770m (£610m), leaving the business with debts of £635m. A year ago, BC recouped all the money it paid for Phones 4u when the retailer issued £200m of bonds that were used to pay BC a one-off dividend."
we've made our money back, and a nice profit, now screw you all
Well the good news that the most of the stores will reopen, either under Vodafone or under EE brand and management, a move which makes me wonder if those two companies (responsible for the demise of phones4u) did this on purpose just to get some of the prime location stores in the UK!
Then came the to refund or not to refund saga, with phones4u sending a mass mailer to all its costumers who prepaid for an iPhone 6 that they will not be able to refund their monies (creating a revolt) and then retracting the first email with a second mass mailer saying .. no .. no.. we will give you the money but do not know how.More details here .
Another day in the world of the UK companies in administration!
basically BC paid for phones4u with debt and some equity. later on, they issued ~£205m in PIK notes and paid themselves a dividend of around £230m which paid back their investment and made them £30m, thankyouverymuch.
net debt went up to 2.2x EBIDTA, 4 times more than before the BC acquisition. unsurprisingly, suppliers such as vodafone were not too enamoured with dealing with such a high risk company no longer able to offer competitive terms.
not long after, the PIK notes became worthless (say goodbye to your £200m investors) and it looks like the senior bondholders are also going to be shafted along with most of the other creditors (say goodbye to another ~£430m or so).
well done, BC. you really manage to sucker everybody including the investors, employees and the tax man.