Phones 4U goes into administration: Senior mobile operator exec explains why retailer went bust

Phones4U’s collapse into administration has undoubtedly been a personal disaster for the thousands of employees who’ve been voicing their anger at the way they learned their employer was going the way of the Rabbit phone network, Squarials and Cellnet.

But when we spoke unattributably to an – ahem – very senior executive at one of the big mobile companies, we were told that, from where they were sitting, Phones4U was toast long ago. Big in its day, but rapidly becoming obsolete. The only surprise, this person said, was that phone companies had kept with it for so long.

They gave the following reasons:

1. Phones4U did not have anything like the scale needed to be really useful to the phone companies. Charles Dunstone, the Carphone Warehouse founder, was far quicker to understand that scale was pretty much the only way retailers like his were going to survive. That’s why his merger with Dixons now looks so canny: the combined company has 2900 stores across Europe, compared with Phones4U’s 550.
2. Kind of linked to point one, but Carphone’s scale means it has a large slice of the market on Carphone Warehouse contracts, with all the direct relationships to the customers that entails. This makes it extremely important for the phone companies to keep it sweet.
3. Finally, and this will not be a popular view with Phones4U’s management, but our man claims Carphone was simply a better company to deal with from the phone operator’s perspective. It gave the operators a better deal on its commission and tended to keep them onside.

Not that any of this is the fault of the poor blighters now facing an autumn of joblessness. Let’s hope Carphone, and the operators themselves, do the decent thing and hire as many of them to their shops as they can.