BC-backed Phones4U enters administration

Kenny Wastell
15 September 2014

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BC Partners-backed Phones4U, the UK-based mobile phone retailer, has entered into administration.

The move is a consequence of recent decisions by mobile network operators (MNO) EE and Vodafone not to renew their partnership agreements with Phones4U. The company's agreements with operators Three and O2 had also suffered similar fates in recent years.

Phones4U's outlets will be closed with immediate effect until PwC, which has been appointed as administrator, has assessed whether the business can resume trading.

BC acquired Phones4U in an SBO from Providence Equity Partners in March 2011, for an enterprise value widely reported to be in the region of £600-700m. According to The Telegraph, the GP has made more than 30% profit on its investment in the company. Last year, BC received a dividend payout after the retailer issued bonds worth £200m.

Phones4U operates 550 stores and employs 5,596 people. The company had a turnover of £1bn in 2013, profits of more than £100m, EBITDA of £105m and had "significant cash in the bank" prior to the latest events, according to BC.

In a statement, the GP said the decisions by both MNOs had been unanticipated and came "as a complete shock". It also said the company had been in a healthy state and recently received indications from EE and Vodafone that they viewed Phones4U as a "long-term strategic partner".