Phones 4u founder John Caudwell had considered rescue bid before collapse

 
Oliver Smith
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John Caudwell sold his 85 per cent stake in Phones 4u for £1.74bn in 2006

Less than two weeks ago, the foun­d­er of Phones 4u, billionaire John Caudwell, was starting to put the pieces together to see if he could launch a daring rescue plan to save the business that had just been cut out by Vodafone, one of its two key trading partners.

“Having realised what that meant [Vodafone’s decision to end its contract with Phones 4u in 2015], I started getting very concerned for the business and getting involved in a small way,” says Caudwell. “I talked to people about what we might do to rescue the business, but while that was happening EE pulled the plug completely and my concern then turned to real horror.”

Now Caudwell says any hope of rescuing Phones 4u has been and gone, with no suppliers left he says it would be nearly impossible to turn the situation around and save the nearly 6,000 jobs being lost.

“There’s nothing I can do now, they’ve been completely annihilated in one fell swoop. The only way this business could be rescued is if a regulator could step in and force Vodafone and EE back to the negotiating table and salvage the business at this 11th hour.”

Caudwell launched his mobile phone empire aged 34 by buying 26 brick-sized handsets from Motorola to found Midland Mobile Phones in 1987. By the end of 2006, Caudwell had become a billionaire by selling his nearly 85 per cent stake, in what had grown to become The Caudwell Group, to Providence Equity Partners and Doughty Hanson & Co for nearly £1.5bn.

Following his exit from the business, Phones 4u became a staple of high streets across the UK, expanding to more than 600 stores and employing nearly 6,000 staff.

“There was always going to be consolidation in the mobile phone industry. Margins are coming under pressure and networks were always looking to reduce competition, so Phones 4u was always under threat,” Caudwell says on the industry.

He places the blame for the business’ eventual collapse firmly on the actions of Vodafone and EE over the past few weeks. However, he claims that BC Partners – the company’s private equity owner – made “clearly a bad move that weakened the business” last year when it issued £200m of bonds to pay itself a one-off dividend.

“It’s quite tragic, for the employees, the business suppliers and all those families who are living in uncertainty tonight,” he says.

TIMELINE: A HISTORY OF PHONES 4U

FOUNDED IN 1987: John Caudwell starts Midlands Mobile Phones, which eventually became The Caudwell Group with its retail arm Phones 4u

£1.5BN PRIVATE EQUITY SALE IN 2006: The Caudwell Group sold for £1.47bn to private equity firms Providence Equity Partners and Doughty Hanson & Co

£700M TAKEOVER IN 2011: BC Partners take over the group in a deal reportedly worth between £600m and £700m

THREE PULLS OUT IN 2012: Operator Three is the first to pull out of Phones 4u in April 2012 due to the company’s decision to focus on direct sales. Phones 4u said: “Given the minimal level of connections in the last few years this will not impact either the Phones 4u or Three business.”

ADMINISTRATION IN 2014: Phones 4U falls into administration after both Vodafone and EE cut ties with the group, while O2 left in January 2014

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