Phones 4U founder Caudwell condemns 'ruthless' networks

http://www.bbc.co.uk/news/business-29218808

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John Caudwell, the founder of Phones 4U, has blamed the demise of his former company on the "ruthless actions" of "predatory" mobile phone networks.

The retailer went in to administration on Monday, putting 5,596 jobs at more than 700 outlets at risk, after Vodafone, EE and O2 did not renew their contracts with the company.

This was an "unprecedented assassination", Mr Caudwell told the BBC's Today programme.

The mobile firms rejected his claims.

Mr Caudwell, who sold Phones 4U to Providence Equity and Doughty Hanson for £1.5bn in 2006, has called on the Competition and Markets Authority (CMA) to investigate the networks' actions.

He suspects the companies may have colluded to remove Phones 4U from the high street in an attempt to reduce competition, but admits that he has no evidence.

John Fingleton, former chief executive of the Office for Fair Trading, said: "It doesn't look very pleasant, it looks very sudden and very abrupt. But that's a very different thing than alleging that the phone companies have got together to try and raise prices or to exclude somebody with the intention of raising prices. And I see no evidence for that."

EE told the programme its decision to end its relationship with Phones 4U was based on its strategy to focus on its own shops and cut out intermediaries, while Vodafone rejected an suggestion that it had acted inappropriately during contract negotiations.

An O2 spokesperson said:

"We informed Phones 4U of our decision to stop connecting new customers through our partnership back in 2012.

"We subsequently took the decision not to extend our contract beyond 31st January 2014. This was a commercial decision we made independently as part of our regular review of our sales distribution."

Stores closed

Accountancy firm PwC has been appointed to see if any of the 560 stores and 160 concessions can be re-opened or sold.

The retailer, now owned by private equity firm BC Partners, has said established mobile contracts taken out through Phones 4U would not be affected, although phones ordered and not despatched - for example anyone ordering the new iPhone 6 over the weekend - would be.

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."