Phones 4u went into administration after mobile network EE decided not to renew its contract on Sunday, risking the jobs of at least 5,596 employees.
The British mobile phone retailer's setback began when Vodafone announced earlier this month that it would no longer renew its contract. Vodafone's contract accounts for 20 percent of the company's revenues and will expire in February 2015, and EE's contract will terminate in September 2015.
"If the mobile network operators decline to supply us, we do not have a business," Phones 4u Chief Executive David Kassler said to Reuters.
BC Partners, Phone 4u's private equity owner, appointed PwC as administrators for the stores. The staff who were affected by the situation will be briefed on Monday and will be paid for the next weeks. The administrators will also evaluate whether some or all of the stores will be reopened for trading.
EE reviewed the performance of its retailers in January and decided to drop Phones 4u to move on with another retailer, Dixons Carphone, The Guardian reported.
"In line with our strategy to focus on growth in our direct channels and to move to fewer, deeper relationships in the indirect channel, and driven by developments in the marketplace that have called into question the long-term viability of the Phones 4u business, we can confirm that we have taken the decision not to extend our contract beyond September 2015," an EE spokesman said in a statement.
BC Partners stated that the decisions of Vodafone and EE came as a shock for Phones 4u, leaving the company with no choice but to go to the administration. Vodafone and Phones 4u were partners for 15 years.
"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," BC Partners spokesman Stefano Curzio said to Bloomberg. "Their behavior appears to have been designed to inflict the maximum damage to their partner of 15 years."
