Phones 4U eyes sale after conscious uncoupling with Vodafone

 
Oliver Smith
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All options are being considered at struggling high street mobile retailer Phones 4U after the firm was dropped by its key partner Vodafone in favour of a deeper contract with rival retailer Carphone Warehouse.

During a call with the firm’s investors last Monday chief executive David Kassler said deep cost-cutting or a sale or merger were among the options being considered by the chain, according to a transcript of the call seen by The Sunday Times.

Meanwhile, BT along with Vodafone, EE, O2 and Three are all being tipped as likely bidders should Phones 4U owner BC Partners decide to sell.

Vodafone, which accounted for 27 per cent of Phones 4U’s contract sales and 16 per cent of its pay as you go sales during the year to 31 July to a total of £212m in sales, said it would stop selling through Phones 4U when its contract expires in February 2015.

Vodafone’s move will reduce Phones 4U’s trading relationships to those with EE, and its legacy T-Mobile and Orange brands, Virgin Mobile, Phones 4U’s own LIFE Mobile brand as well as a number of smaller carriers. While EE in July announced a review of its indirect sales through Phones 4U, which is still ongoing.

The value of Phones 4U’s debt, listed on the Irish stock exchange, plummeted from 87p to 30p following the company’s announcement last week that Vodafone would not renew its contract with the group.

“Although we are disappointed with the decision by Vodafone, Phones 4U continues to trade well in the market,” said Kassler last week in a public statement. “Both transactions and search traffic through our new mobile commerce site are growing rapidly as customers increasingly look to begin their purchase journey online, and they are continuing to choose to shop with Phones 4U because of the great service and value they get across all channels.”

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