What happens when phone companies don’t talk
Phones4U’s loss is the gain of other phone retailers but for how long?
A Phones 4U shop in central London with its shutters down as more than 500 of its stores were shut after the retail chain went into administration. Photograph: Philip Toscano/PA
As administrators race to save stores and jobs at Phones4u, recriminations over the shockingly abrupt demise of the mobile phone retailer are becoming increasingly bitter.
Founder John Caudwell, who set up the business in 1986 and sold it for £1.5 billion (€1.88 billion) in 2006, has blasted the “ruthless” mobile networks for “an unprecedented assassination of a business”. After Vodafone decided not to renew its contract with Phones4u last month, the decision at the weekend by the Orange and T-Mobile group EE to do the same left the retailer unable to continue in business. Without phones from the networks, its stores would have nothing to sell.
Its 700-plus outlets, including 550 shops and 160 concessions in Dixons stores, have been shuttered and its 5,600 employees await news of their fate. Administrators at Pricewaterhouse Coopers are attempting to strike deals with mobile networks to buy some of the stores to bulk up their own distribution chains, but most of the workers will lose their jobs.
It is a bitter irony that the companies that brought about the retailer’s collapse, Vodafone and EE, will now dictate how many of the stores and jobs are saved.
Caudwell, who believes the two worked together to finish off Phones4u, has called for an inquiry into their decisions not to renew contracts, which came within weeks of each other.
Phones4u’s private equity owner, BC Partners, has also come in for criticism, notably for taking out a special dividend of more than £200 million from the business last year, leaving it loaded with debt.
There are some winners in the sorry affair: Dixons Carphone will benefit, at least in the short term, from the removal of a major competitor. Reflecting that, its shares jumped over 2 per cent as analysts estimated it could add about £225 million in annual sales as a result.
The long-term benefit is less certain. Carphone could find itself on the receiving end of the same treatment as Phones4u as the networks seek to boost profits by cutting out all the middlemen and selling through their own retail chains. lll Property prices Property prices in London have reached a remarkable milestone. For the first time, the average cost of a home has breached the £500,000 level, rising to £514,000.
That’s an increase of 19.1 per cent in the year to July, compared with a rise of 11.7 per cent for the UK as a whole, where average prices are now £272,000, according to the Office for National Statistics.
There are sharp regional variations. In England, the lowest average price was seen in the northeast, at £156,000. But, despite recent reports of a slowdown, the house price boom continues to spread beyond London – even as far as Scotland.
The ONS breakdown shows that prices in Scotland have surpassed their pre-crisis peak for the first time, rising by 7.6 per cent in the 12 months, and taking the average to £198,000. Along with prices in England, they are now at record levels.
Wales still has a little way to go, with prices up 7.4 per cent but still 0.8 per cent short of 2008 levels.
Northern Ireland remains by far the worst performer in the UK, however, with prices still languishing as much as 46.7 per cent below their 2007 peak despite a 4.5 per cent increase over the year. For the Scots, who will cast their historic vote on independence tomorrow, news of the new record came amid dire predictions of a property collapse if the yes camp gets its way.
Property website Zoopla warned that more than £31,000 could be wiped from the value of the average Scottish home and £85 billion from the value of the housing stock north of the border in the aftermath of a break-up.
Zoopla highlighted a 17.5 per cent crash in Scottish prices during the financial crisis and says shockwaves from a yes vote could be equally if not more traumatic.
Meanwhile in London, while some may get a kick from their status as a “half-millionaire homeowner”, breaching the £500,000 level comes with a sting in the tail.
At £500,000, stamp duty on house purchases is levied at 4 per cent, rather than 3 per cent, which means that selling a property for £501,000 rather than £499,000 will cost an extra £5,000, taking the stamp duty bill to more than £20,000.
Fiona Walsh is business editor of theguardian.com