Phones4U in administration

Author
Discussion

Olf

11,974 posts

217 months

Monday 15th September 2014
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Call me cynical but if Phones4U were really negotiating hard with the operators and walking away like the big man - this could be a tax game by the VCs pulling the strings.

DoubleSix

11,691 posts

175 months

Monday 15th September 2014
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Olf said:
Call me cynical but if Phones4U were really negotiating hard with the operators and walking away like the big man - this could be a tax game by the VCs pulling the strings.
Not sure where this view that they were negotiating hard has come from.

Clearly, they were in no such position having recently lost contracts, the operators would have known this. More likely the operators smelt blood and attempted to squeeze, but the patient died on the operating table.

User33678888

1,141 posts

136 months

Monday 15th September 2014
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Had they not already been going downhill for at least a couple of years?

I visited a P4U branch in 2012 having seen what looked to be quite a good deal advertised in the window for a phone I wanted. I just wanted to ask some questions about the deal being offered, but the sales girl insisted she asks lots of questions and fills in her sales forms. I finally got to ask her some questions, which is what I'd come in for, and she couldn't answer half of them. (Simple things like: you're recommending Orange over 02 as it is £4 a month less. Which has better roaming rates?)
Anyway, it turned out it would cost me about double the (cheap) window price.
I tried to negotiate and was met with 'I thought you said you can afford £45 a month?'. The mere concept that anyone would try to negotiate a better price even if they could afford top whack was met with utter dumbstruck confusion. I started to walk away and the manager stepped in to offer a free bluetooth headset. I then went home and got the same deal £15 a month cheaper with a load of cashback through a competitor.

Kermit power

28,634 posts

212 months

Monday 15th September 2014
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spats said:
CPW might have started out similar to f4U but they are much broader now.

For some years they've had Talktalk home phone service, then broadband service and now internet tv aswell.

Plus they used to run a few pay as you go services including calls abroad on the cheap, not sure if they still do that though.

I doubt whether CPW or DCP will disapear as quickly as p4u did.

Sad days for the staff!
CPW and Talktalk split four years ago...

spats

838 posts

154 months

Monday 15th September 2014
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Kermit power said:
CPW and Talktalk split four years ago...
So they did. Ok so technically thats just not keeping all your eggs in one basket surely?

OK so the stores could go pop just like p4u did.

Looks like the best buy thing worked out ok for cpw though. they put in 1.1bn and paid out 500 million to end it?

markh1973

1,786 posts

167 months

Monday 15th September 2014
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Olf said:
Call me cynical but if Phones4U were really negotiating hard with the operators and walking away like the big man - this could be a tax game by the VCs pulling the strings.
Explain how this "tax game" you're suggesting will work then?

Olf

11,974 posts

217 months

Monday 15th September 2014
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markh1973 said:
Explain how this "tax game" you're suggesting will work then?
Someone earlier in the thread was claiming with a bit of authority that P4U were playing walk-away from the negotiations with at least one of the operators. If that were the case you have to wonder why such a negotiation strategy would be credible. Only reason I can think of would be if you had no intention of succeeding. If you've basically stripped all of the value out of the co. Loaded it with debt and are looking for an exit then forcing a situation like this is essentially the same as declaring force majeure (don't argue the semantic) on the investment. For the major shareholders (VCs), that could be a multi million pound write down against your other healthier investments from what is essentially a busted hand anyway. Last ounce of value and all that.

I just can't understand how you get yourself in this position otherwise. It's either unspeakable bad management/negligence or conniving of some other description. The cynical in me says the latter. The truth will out eventually.



Edited by Olf on Monday 15th September 18:44

Welshbeef

49,633 posts

197 months

Monday 15th September 2014
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Justin Cyder said:
Vodafone pulled the plug, £70m revenue gone, goodnight & god bless. Lesson there on the 80/20 rule, applies if you're small, medium or massive.
Scottish will be thinking hard about this if its a YES

Lobsta

12,543 posts

180 months

Monday 15th September 2014
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I feel a little guilty now, I always had my phones from them until this last one.

anonymous-user

53 months

Monday 15th September 2014
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Dealt with P4U once and only the once. Bought a contract from them and then they sent a text message asking me to call customer services, I thought there was a problem but it turned out to be them trying to sell me insurance. Considering I was paying for the call it was a bloomin' cheek and why I never dealt with them again.

If they behaved like that to their customers, their demise was inevitable but hastened by the operators wanting a bigger piece of the pie. I for one won't miss them and their horrible adverts.

anonymous-user

53 months

Monday 15th September 2014
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Lobsta said:
I feel a little guilty now, I always had my phones from them until this last one.
It's not your fault. Don't feel guilty, it's NOT your fault. wink


hornetrider

63,161 posts

204 months

Monday 15th September 2014
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Magog said:
SydneyBridge said:
Just reading that the owners, a private equity company, paid themselves a £200 million bonus last year despite the debts
Nice work if you can get it.
Quite.

http://www.telegraph.co.uk/finance/newsbysector/me...

lamboman100

1,445 posts

120 months

Tuesday 16th September 2014
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^ P4U looks like Rover 2.0.

Top bosses rack up huge debt (mortgage the business) to self-pay mega-bonuses party

Pints

18,444 posts

193 months

Tuesday 16th September 2014
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gottans said:
If they behaved like that to their customers, their demise was inevitable but hastened by the operators wanting a bigger piece of the pie. I for one won't miss them and their horrible adverts.
Does it not tell you something that all operators have a working contract in place with CPW, but they've all chosen to leave P4U? I don't think it was the operators wanting a bigger slice, but rather P4U demanding rates which just weren't comparable with their competitors and, quite frankly, they don't offer the service that customers should otherwise expect - given the anecdotes in this thread. Why should the operators pay over the odds for that?

Otispunkmeyer

12,553 posts

154 months

Tuesday 16th September 2014
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hornetrider said:
They're worth it remember! Top talent and all that.

skyrover

12,668 posts

203 months

Tuesday 16th September 2014
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I always looked at them like the bloatware on mobile phones themselves

Just another unnecessary layer to muddle through... no thanks.

gpo746

3,397 posts

129 months

Tuesday 16th September 2014
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skyrover said:
I always looked at them like the bloatware on mobile phones themselves

Just another unnecessary layer to muddle through... no thanks.
Good point.
Actually it was the thatcher government that started all that by making sure there were middle men in the industry. You can fall asleep now as the potted history is put to the thread.
Back in the early days Mrs Thatcher's government introduced a level of competition that may well have surprised the British Telecom juggernaut at the time. They invited rivals to be in place and so Vodafone came about. They also came up with the "middle men" prospect and so you had companies like Vodac/ Martin Dawes/ Talkland / Cellcom/ Call Connections/ etc either providing airtime or airtime and retailing outlets. Some of these simply resold Vodafone or Cellnet airtime some did both.

You also had lot's of dealers of varying quality popping up some would do Vadafone some cellnet some would do the above with Orange or 121 as well.
Then along came Carphone Warehouse with a cleverly plotted retail strategy that propelled them upwards they seemed fresh clean and were REALLY were good retailers. They upped the game.
Along the way Vodafone had a makeover and changed its logo and came up with the low line rental higher call cost package that cellent then emulated. Cellnet became BT Cellnet and then when that was sold became o2
The next few years were effectively spent with the 2 GSM Networks (ignore Orange and EE/ T Mobile 121 as they had their own networks initially based around a different version of GSM called PCN) making offers, buying out various Cellular airtime providers. Over time they all went with Peoples Phone being one of the bigger ones.Peoples Phone who initially provided just airtime often as a last resort for people with poor credit (this was before PAYG) were able to get a mobile that other companies would have refused. Think of Peoples Phone as a sort of Provident Credit type company if you like.
It seemed to be Vodafone who made most of the running in acquiring these companies with seemingly regular once every 2 months acquisitions. Over time they all were absorbed Talkland/ Vodac, Cellcom they all went eventually when the offer from Gerald Whent((boss Of Vodafone and a genuine visionary) was made.
Possibly one of the last and certainly one of the biggest ones with its business orientated customer base was Martin Dawes. O2 Played a blinder by buying out Martin Dawes. Why it was such a blinder and stunned people in the industry at the time was because around upwards of 70% of the Martin Dawes customer base was actually on Vodafone. Hell make that 80% plus

Whether "the middlemen" idea did add value to the market is open to debate. Certainly initially it added choice. That choice could be confusing.Some airtime companies bought the pie of airtime from Vodafone or Cellenet (or both) and "sliced that pie" as they seemed fit. some off peaks didn't start till like 9pm and finished at 8am it was all very complicated and a Martin Dawes airtime contract may not offer the same terms as one from Vodac. It sure as hell didn't offer the same terms as a Talkland one

The poster I quoted - his quote is very accurate now as its not as if the retailers can offer anything different on the airtime packages. Its simply down to the price of the phone length of contact (if any variations are offered) and what accessories you want to clinch the deal. Why a network would want to pay commission to someone in todays market is stretching it really. You can simply tap in Vodafone and see the deals, tap in EE and see the deals etc.
In the grand scheme of things I can't see 4U being mourned much. Its a shame for their staff but then again they were hardly the fairest most transparent people to deal with. It was all about the sale little about the customers worth to them apart from getting that all important upfront sale.

Sheepshanks

32,519 posts

118 months

Tuesday 16th September 2014
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Justin Cyder said:
They were a trade supplier to O2, Voda & EE. O2 bailed in January, Voda last week & EE were the last contract remaining. It therefore sent them into last ditch crisis talks with EE, which I imagine will be revealed to have broken down over a takeover bid.


This is in no way any kind of in the know schtick, just me following the story in the papers over the past few weeks.
I don't get the comment about them being a "trade supplier"?

Perhaps I'm missing something about how the business works, but surely it's the other way around, and they were just a distributor/reseller? That's a pretty stty business generally. Look how bad it is for car dealerships, and you can't (easily) send a new car by post.

eccles

13,720 posts

221 months

Tuesday 16th September 2014
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Otispunkmeyer said:
hornetrider said:
They're worth it remember! Top talent and all that.
Good old private sector! A few millionaires get richer while 5000 staff face no job, and we have to pick up the bill by paying dole!

gpo746

3,397 posts

129 months

Tuesday 16th September 2014
quotequote all
Sheepshanks said:
Justin Cyder said:
They were a trade supplier to O2, Voda & EE. O2 bailed in January, Voda last week & EE were the last contract remaining. It therefore sent them into last ditch crisis talks with EE, which I imagine will be revealed to have broken down over a takeover bid.


This is in no way any kind of in the know schtick, just me following the story in the papers over the past few weeks.
I don't get the comment about them being a "trade supplier"?

Perhaps I'm missing something about how the business works, but surely it's the other way around, and they were just a distributor/reseller? That's a pretty stty business generally.
Possibly Justin means that as they (4U) bought the handsets in themselves they used the commissions from the networks to recover those handset costs and make their profit. That was how smaller independents worked. Against that (and this is from experiences of a few years ago- things may have changed) If you as an independent connected Orange phones all the Orange handsets were branded as Orange. If you connected on Vodafone or O2 the handsets were 2generic" stock that you just popped a sim in.
Assuming they (4U ) operated in that way they would effectively be delivering a connected customer to the network and so would supply them with a customer ?
If you get me.
I would have thought though that in the case of EE they would have had to get their stocks via EE ?

I know (again based on a few years ago) that a Carphone Warehouse deal on Vodafone or O2 that the handset will be unlocked. I think it also applied to Orange deals to.