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'Ruthless' networks 'killed' Phones 4u, says founder

The Staffordshire founder of the Phones 4u business has launched bitter criticism of the mobile phone networks he blames for the company's collapse.

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The sale of the business in 2006 turned John Caudwell into a billionaire, and he left the company in strong shape, valued at £1.47 billion.

But moves by networks EE and Vodafone to sever their links with Phones 4u has plunged the company into administration.

The jobs of its 5,600-strong workforce are in jeopardy while its 500 stores were closed yesterday as administrators from PricewaterhouseCoopers tried to figure out if the business could be saved.

Including staff at concessions in Currys, the firm employs 108 people at its branches in Wolverhampton, Bilston, Walsall, Dudley, Wednesbury, West Bromwich, Stourbridge, Merry Hill and Cannock.

But 61-year-old Mr Caudwell, who lives at an Elizabethan manor house near Eccleshall and has devoted much of his time – and money – to good causes since he sold up, has reacted with fury to the plight of his one-time firm, and its staff.

Taking to Twitter yesterday he said: "Such a sad day for @Phones4u and all its employees! Brought to its knees by ruthless so called 'partners' moving in for the kill!!!"

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And he was clear where the blamed lay: "Unfortunately combination of short term private equity strategy combined with ruthless network 'partners' & government killed @Phones4u."

Mr Caudwell added: "I am sickened and saddened for nearly 6000 wonderful employees who made @Phones4u into a great business. #ruthlessvodafone #ruthlessEE."

Mr Caudwell, and his brother Brian, set up their business, originally called Midlands Mobile Phones,in 1987 to sell some Motorola handsets.

The venture quickly transformed into a wholesale distributor under an aggressive retail expansion drive that, by 2003, saw it sell 26 phones every minute.

How do you think the loss of Phones 4u will affect the mobile phone market? Will it make it better or worse? Leave your comments below.

Mr Caudwell later sold the Phones 4u business for £1.5 billion in 2006 to private equity firms Providence Equity Partners and Doughty Hanson. They then sold it to BC Partners in 2011.

But in recent years many mobile operators have opened their own stores to sell direct to the customer.

And the merger of Phones 4u's largest rival Carphone Warehouse with Dixons also helped pile on the pressure.

See also: 200 jobs to go at historic Wolverhampton firm.

Carphone Dixons yesterday invited Phones 4u staff to apply for the 1,500 vacancies at its Carphone Warehouse stores.

Meanwhile it was Three, the UK's smallest operator, which was the first to pull the plug on its partnership with Phones 4u, followed by O2 and then Vodafone earlier this month.

A spokesman for Vodafone said its decision to walk away from the group came after months of negotiations.

The final blow fell on Friday, when EE announced it was cutting its ties with the retailer.

EE said its decision was in line with a strategy to move to "fewer, deeper relationships" with its retail partners.

See also: 50 jobs saved as historic Oldbury boiler firm is salvaged.

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