One story that has gripped the UK mobile industry this week so we’ve dedicated our things we’ve learned to Phones 4u situation
Playing the PR game
Phones 4u started as they meant to go on with the two strongly worded statements blaming the networks that accompanied its announcement about administration. But that was just the start, the retailer has used every PR weapon at its disposal in the battle for mobile industry hearts and minds. From John Caudwell’s tweets with strategically placed hashtags (#ruthlessvodafone #ruthlessEE) to emoticons from ‘heartbroken’ Phones 4u staff, the retailer has embarked some very public figure pointing. The networks have been largely silent during this media onslaught, and certainly haven’t been helped by the publicity that surrounded the news that EE and Vodafone were looking to buy a number of Phones 4u stores. The deal proposed by US law firm Brown Rudnick overnight on Wednesday also seemed to be designed, in part, to turn the screw on the operators. There are obvious reasons why Phones 4u would choose to fight such a campaign in the aftermath of its collapse into administration, but how well this plays out in the long run remains to be seen.
It’s quite unusual for an administrator to thank the staff for their support, but that was the case during Thursday’s investors call. Phones 4u’s employees have so far vented their frustration at the networks rather than the firm’s management. The initial hope that the retailer’s cash in the bank and high revenues would attract a quick buyer has now faded and as more is revealed about the collapse it will be interesting to see if the staff’s anger remains in pointed in the networks direction. Particularly as the reality of store closures and redundancies draws closer.
Don’t mention the debt
The Phones 4u PR machine has been fairly successful in deflecting analysis of its collapse on to the networks. But as time has passed more and more people have begun to look at the retailer’s role in its own demise. One of the major topics that has continually been raised is how debt effected Phones 4u’s ability to be competitive. Industry sources have told Mobile that the retailer priced itself out of a merger with Dixons and was quoting terms to the networks that were way above what its main rival was asking because of the debts the retailer had. It serves as a lesson to the industry about how dangerous debt can be, particularly in a business where margins can be fine and competition is incredibly fierce.
The administrator mentioned 3 interested parties who talks were ‘most live’ sparking speculation over who the third might be. With EE and Vodafone are a given debate has raged to who the third could be with a huge number of companies being touted as the final name in the frame. Sky, BT, Virgin and Dixons Carphone have all been mentioned, with the last one of those the most probable candidate. However, having taken on all the Phones 4u concessions and with a major recruitment drive continuing it will be interesting to see quite what the retailers appetite is for increasing its retail footprint. Especially when you consider that they already have a pretty extensive high street portfolio.