EE insider: It was Phones 4u who walked away from contract talks, not us

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EE source says operator tried to negotiate but Phones 4u refused to lower commission demands

EE had planned to extend its contract with Phones 4u but the network was forced to walk away from talks after Phones 4u negotiators refused to lower commission demands of around £450 per connection.

So says a high-level source at EE, who told Mobile News that Phones 4u was earning more than double the average commission rate.

“We wanted to continue working with Phones 4u. But we needed to renegotiate our deal given the many millions of pounds we have lost due to changes in EU roaming and termination rates,” said the EE source, who spoke on condition of anonymity.

“Unfortunately we weren’t able to get anywhere near acceptable commercial terms with Phones 4u.”

Phones 4u has around 2.7 million EE customers. Last week owners BC Partners publicly blamed EE and Vodafone for its demise after both networks declined to renew contracts.

Failed efforts
However, the EE insider insisted it was actually Phones 4u’s management which “walked away” from negotiations that concluded on July 31.

The EE source added the network attempted to keep the lines of communications open with Phones 4u but the retailer allegedly refused to move on its demands.

This lack of “flexibility” led to EE notifying Phones 4u on September 12 that it would not be extending its current deal. At this, Phones 4u would have lost all network partnerships.

The EE source also admitted the network was shocked when owners BC Partners called in the administrators just three days later.

“We had every intention of  honouring the existing contract deal which would have  provided Phones 4u with significant revenue opportunities, particularly with the iPhone 6 launch last week.

“We expected they would issue a statement that the EE contract would not continue after September 2015, but they moved very quickly to announce they were going into administration.

“They’ve got four more months trading with Vodafone, and 12 more months with us. We would have seen out the year but they’ve not given us that option.”

Ruthless
Our source also refuted comments made by Phones 4u founder John Caudwell accusing EE and Vodafone of ruthless behaviour and collusion.

Caudwell, who set up Phones 4u in 1996 before selling it for £1.47 billion in 2006 to private equity firms Providence and Doughty Hanson, described the operators actions as an unprecedented assassination and should be investigated.

Caudwell wrote on his Twitter account on Sunday evening, September 14: “Such a sad day for Phones 4u and all its employees. Brought to its knees by ruthless so-called partners moving in for the kill.

“Unfortunately a combination of short-term private equity strategy combined with ruthless network ‘partners’ and government killed Phones 4u.”

Representatives from BC Partners, Phones 4u and its administrators, PwC, appointed Monday September 15, all declined to comment as Mobile News went to press.

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