A distribution tussle between U.K.-based wireless operators and retailer Phones 4U is set to cost nearly 5,600 people their jobs.
The retailer, which included 720 retail outlets, noted on its website that it was forced “offline” following “the unexpected decision of EE and Vodafone to withdraw supply from Phones 4U.” The retailer has reportedly been forced into “administration,” which is a form of bankruptcy protection.
According to published reports, Phones 4U’s closing was a combination of poor cash management from the retailers ownership and a pricing squeeze from wireless carriers. One report indicated that wireless carriers were upset following a recent move by Phones 4U owner BC Partners to offer up $325 million in a bond offering and then pay itself the same amount in a one-off cash dividend. BC Partners did say that it intends to be paid “until further notice.”
The move comes as competition in the U.K.’s wireless market has begun to heat up. According to a Sparks Market Intelligence report, rate plan prices in the U.K. changed 1,800 times over a one-week period, while the market witnessed a 25% increase in the number of unique offers from January to August of this year.
“While monitoring the U.K. telecom market, it rapidly became clear that network carriers and mobile retailers are fighting to stay ahead,” said Nir Dupler, VP for business development at ForNova, which backed the report.
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