By Jonathan Davies

The mobile phone retailer Phones4U has entered administration after a contract with EE wasn't renewed.

It means 5,596 staff at Phones4U's 550 stores across the UK are at risk. BC Partners, the private equity firm which owns Phones4U said all stores would be closed by the end of today (Monday).

Phones4U blamed the decision on EE, which decided not to renew its contract to supply mobile phones and contracts. It follows similar moves by Vodafone and O2.

Phones 4U boss David Kassler said: "If mobile network operators decline to supply us, we do not have a business."

An EE spokesperson said the decision was "driven by developments in the marketplace that have called into question the long term viability of the Phones 4U business".

It appears that mobile network operators are moving to a strategy of 'cutting out the middle man'. With data roaming charges being squeezed, it is thought that the operators are looking to secured customers directly, rather than through third party retailers like Phones4U. The EE spokesperson added that the decision was "in line with our strategy to focus on growth in our direct channels".

PwC has been appointed as administrators and will decide whether the business can continue to trade and if a buyer should be sought after.

Mr Kassler said: "A good company making profits of over £100m, employing thousands of decent people has been forced into administration."

Stefano Quadrio Curzio, from BC Partners, said: "Vodafone has acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4U over more than six months.

"Their behaviour appears to have been designed to inflict the maximum damage to their partner of 15 years, giving Phones 4U no time to develop commercial alternatives.

"The company is in a healthy state and both EE and Vodafone had, until very recently, consistently indicated that they saw Phones 4u as a long-term strategic partner."

Phones4U has said customers with existing contracts would not be affected by the administration, but orders made but not yet dispatched will be affected.

You can email your reactions to editor@freshbusinessthinking.com

Join us on
Follow @freshbusiness