BT alongside Vodafone, EE, O2 and Three are all tipped as likely contenders to buy all or part of Phones 4u, if its owners decide to sell following Vodafone’s shock decision this week to ditch the retailer.
Vodafone’s withdrawal deals a major body blow to Phones 4u, made all the more painful by the operator’s move to strengthen its ties with Phones 4u’s arch rival Dixons-Carphone.
The decision, which follows Vodafone’s review of its indirect partners, saw the operator terminate its contract with Phones 4u from February 2015, leaving EE as Phones 4u’s only remaining network partner.
Analysts predict Phones 4u’s owners BC Partners will seek a sale or merger, with industry players tipping BT as the front runner. As Mobile reported in July, BT is considering a return to the high street as part of its wider quad-play strategy.
One network source said: ‘I think the sale of the business is a real possibility. BT has no high street presence and with its EE MVNO and its move into quad-play it could make eminent sense for them to make Phones 4u an offer.’
Neil Mawston, Strategy Analytics director, said one solution could be a merger. He said: ‘There is a “flight to scale” in the UK mobile industry right now and Phones 4u is losing out. Phones 4u may need to start searching for a white knight merger partner.’
Dario Talmesio, Ovum principal analyst, said Phones 4u could face the same fate as The Link, which Dixons sold to O2 in 2006, with the operator then selling off most of the 295 stores to Three, Vodafone, Orange and T-Mobile.
Talmesio said: ‘EE certainly has the upper hand now and that is never a good situation to be in. It does not have many choices. It could be sold off or it could start partnering with Tier Two and Three device manufacturers.’
Phones 4u’s position is made all the more precarious by EE’s ongoing review of its indirect partners. As Phones 4u’s only network partner, the operator holds the retailer’s fate in its hands. EE said: ‘Phones 4u is one of our indirect retail partners, and we have an existing contract with them which [this] news does not change.’ However, one source said the network is ‘looking again at its relationship with Phones 4u in the light of Vodafone’s decision.’
One operator source said: ‘All the major networks are possible contenders if Phones 4u is put up for sale, since they are all seeking to increase their retail footprint.’
Phones 4u said it will continue trading with EE, and is ‘in active discussions with existing partners, other networks and third party MVNOs to seek to reallocate the Vodafone volume’.