News - EE and Vodafone in talks to buy up the best bits of Phones 4U

[HEXUS]

Report says three parties are interested in cherry picking the stores, stock and staff.

Read more.

[Jowsey]

My rage at the thought of EE and Vodaphone benefitting from this is burning a hole in my chest. This needs to be investigated right now. Plans to purchase a high street brand aren't generated over night. This is a cold and calculated plan. Or maybe I'm just cynical.

[CK_1985]

So let me get this straight...

EE and Vodafone refuse to renew their contracts with Phones4U, effectively killing the company overnight. They then get to swoop in and snap up all the best real estate and stock, no doubt at a knock-down price, as well as the best staff. They then use those acquisitions to expand their own retail operations, and with one of their major competitors out of the way no doubt use the opportunity to increase margins.

Sounds like a no-brainer for EE and Vodafone, but terrible news for the customers

[RobbieRoy]

Not cynical - just coming to the realisation that this is what we have allowed our country to become - an economic battlefield for rich conglomerates rather that a fair society of citizens.

[Unique]

My rage at the thought of EE and Vodaphone benefitting from this is burning a hole in my chest. This needs to be investigated right now. Plans to purchase a high street brand aren't generated over night. This is a cold and calculated plan. Or maybe I'm just cynical.

why rage? do you work for any of the companies?

as long as no party has broken the law then what's the problem?

we know some of the phones companies had been looking to go into partner ship with phones 4 u but a deal wasn't reached. i've been in the same boat myself. a company wanting to buy the company I worked for, and they pulled out last minute as there was an issue over terms. so the company I worked for went insolvent as business wasn't good and they had screwed up a big deal that gave them a lot of money which they invested badly and generated considerable debts. in the end the company that was going to buy them ended up buying the company, but without having to repay a large amount of debt to the banks that was part of the deal

this isn't an unusual situation

[Unique]

So let me get this straight...

EE and Vodafone refuse to renew their contracts with Phones4U, effectively killing the company overnight. They then get to swoop in and snap up all the best real estate and stock, no doubt at a knock-down price, as well as the best staff. They then use those acquisitions to expand their own retail operations, and with one of their major competitors out of the way no doubt use the opportunity to increase margins.

Sounds like a no-brainer for EE and Vodafone, but terrible news for the customers

I'm not sure why it's terrible news for the customers

if phones4u operated their business in such a way that they were over reliant on one or two suppliers to be profitable, it doesn't sound a great business model to begin with. if they then can't reach an agreement with these suppliers that are essential for the ongoing operation of the business, then they only have themselves to blame

most of what the business seems to have been doing is acting as a sales agent on behalf of other companies, so vodaphone and EE are given them a cut of sales of their products and services, when they could sell direct

the customer can still choose what phone they want and which supplier, but now if p4u close they have one less supplier that sells a number of service providers under the one roof. there are still others including carphone warehouse, and more and more of service providers own stores appear to have popped up, usually next to competitors so you can still buy direct if you prefer

if you as a service provider want to run your own stores selling your goods, then giving one of your competitors those same goods and services to sell at a similar or same price isn't always a great idea

[CK_1985]

...as long as no party has broken the law then what's the problem?...

Just because something isn't technically illegal doesn't mean it's ok - tax avoidance would be the classic example.

I think people are justifiably concerned that this whole situation smacks of EE and Vodafone coming to some sort of 'understanding' that benefits them both hugely, at the expense of Phones4U and the wider public.

[SUMMONER]

No wonder EE and Vodafone backed out of buying half each, they knew that all they had to do was stop supplying phone services to P4U and wait, to get it all on the cheap.

I wonder what the creditors will have to say about all of this, also they will probably just be happy to get some money back.

[Unique]

Just because something isn't technically illegal doesn't mean it's ok - tax avoidance would be the classic example.

but them it's simply a matter of opinion whether it's okay or not. if companies legally follow the law in regards to paying taxes, then it's ok as far as I'm concerned, and it's the people involved setting the tax rules at fault (including those who set any laws/rules that affect these rules - ie. the EU)

I think people are justifiably concerned that this whole situation smacks of EE and Vodafone coming to some sort of 'understanding' that benefits them both hugely, at the expense of Phones4U and the wider public.

what expense to the wider public?

I would doubt the two companies conspired, as opposed to it being plainly obvious to both what would happen if they pulled out. but at the end of the day that's due to the actions of inactions of p4u in regards to their business model relying too heavily on one or two third parties. the same applies to any business in this situation, it's not a good business model if your business is reliant on one third party to operate profitably. that's no fault of the third party or parties

[semo]

Let's not get sidetracked by the business tactics from big service providers. The most important thing is that Phone4u is dead and that's a good thing. The less middle man we have, the better.

As for EE ang Vodafone, I will be canceling my Orange contract in the coming weeks. It's unlikely to change anything as the majority of people don't really care who they give their money to.

[scaryjim]

... if phones4u operated their business in such a way that they were over reliant on one or two suppliers to be profitable, it doesn't sound a great business model to begin with ...

tbh it's worse than that. Mobile network operators have been steadily increasing their direct sales for around a decade now, putting themselves in direct competition with P4U. P4U essentially did nothing to respond to that situation (unlike CPW, who started to offer their own mobile, home phone and broadband services). So it's not that their profitability relied on one or two suppliers, but that their entire business model relied on having supply contracts with their direct competitors. That was never going to end well.

[mixma0739]

Hands up those who are blind to the angularities of this exercise of Da Splits. You know, using the “employment” bogeyman, which is a godsend to any politiko – just like some joker was prone to comment, “As eet happens ladies & gentlemen …” Yes, we’s gottas a luvly-jumbly one for you ‘ere. “Carve up the greedy-dumb git”, perhaps some would have observed, as Infinitisers collect more of their worshipfuls with seeming acts of abandoned generosity.

For Da Stoopid, oka The Egotisticals, and Da Dumb, oka The Conditioned-Conditionals, this round of merry-making will end up with more pocket-gouging. As such, watch out for the day when honesty of pricing pops up its head for the kiss. Freefones? Hands up those who believe that there is such a thing – unless your leader is mired into the smell and touch of a man, of course. Like that Infiniter Afplings had shown, when it comes to marketing, all one needs is a mechanism for squeezing blood from Da Stoned. But who cares when it is only The Stupid-Dumb under the grinder, eh? Yes, nothing to watch, just go your way…..

[Top_gun]

According to this article BC partners, an private equity firm and owner of P4U, was busy asset stripping the company rather than developing P4U to a more sustainable business model.

Winners: BC partners (£225m dividend plus 30% return on their original investment), vultures like Vodafone & EE carving up the P4U business.

Losers: 5,500 P4U employees

The rich get richer and the ordinary person gets poorer.

[Jowsey]

why rage? do you work for any of the companies?

as long as no party has broken the law then what's the problem?

we know some of the phones companies had been looking to go into partner ship with phones 4 u but a deal wasn't reached.

I'm angry because of the loss of jobs this is going to cause. I appreciate the company was stagnant with regards to it's business model and perhaps the company was highly geared but it was profitable. If a business can maintain is profitability then that business can do a lot over a period of time. However, EE and Vodaphone have pulled the rug out from under the feet which if it was purely on the merit of the contracts standing and offered, would have been fine. But it seems as though this is a little more staged than should be feasible. It seems like it's very underhanded and as such I hope an investigation is launched into this series of events.

If the findings are it was all above board and that P4U was poorly managed and the decision to withdraw contracts was a purely commercial one with no view to picking the P4U carcass, then that's business.

However, if it is found otherwise, then there needs to be serious ramifications.

[Defiant]

No laws may have been broken in this but I feel this morally wrong for EE and Vodafone to purchase chunks of Phones4u.

I can but hope that someone else can offer a better deal for the staff, I would not wish for the sale to be blocked from EE and Vodafone if it means people have a job again. But I would imagine that it will leave a sour taste in a lot of mouths.

[crossy]

Both EE and Vodafone were in talks about pursuing a joint 50:50 takeover of Phones 4U as recently as two months ago, reports Sky News, although the plans were abandoned in the end. The two companies deny that they are to blame for the collapse of Phones 4U, with a Vodafone spokesperson highlighting that "the decision to terminate our contract with them was made independently by the UK management team on purely commercial reasons following extensive negotiations."

Colour me doubtful - especially with Vodafone's past dealings wrt tax they owed.

Just because something isn't technically illegal doesn't mean it's ok - tax avoidance would be the classic example.I think people are justifiably concerned that this whole situation smacks of EE and Vodafone coming to some sort of 'understanding' that benefits them both hugely, at the expense of Phones4U and the wider public.

Agree utterly with both points you're making. It's maybe something that the competition authorities should be looking into since, at face value, it looks quite suspicious.

Let's not get sidetracked by the business tactics from big service providers. The most important thing is that Phone4u is dead and that's a good thing. The less middle man we have, the better.

Erm, I'm not sure that I agree with you. Yes, dispensing with the middleman's cut is a good thing. On the other hand the point some have made is that CPW/P4U/etc were good at giving the consumer a side-by-side comparison of the various providers, plus CPW & P4U have been pushing themselves as offering a better quality of service than the carriers themselves have been willing to do. And do you really think that losing these 3rd parties will result in their cut of the contract costs being passed back to the customer? If you do, then you've got more faith in the companies concerned than I have.

Certainly I'd agree that the "increased service" was the case with the P4U local shop - invariably very helpful, even to the point of saying "you could try CPW round the corner for that, just don't say we sent you". I compare that with the behaviour of the local Three and Voda stores, whose attitude to questions were (both) "it's (somewhere) on our website, go look there".