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September 1, 2014

Vodafone to ditch Phones 4U deal partnership

Leaves reseller with just EE as a sole official network partner.

By Vinod

Phones 4U saw its value fall sharply today following the news that Vodafone has chosen to terminate its contract with the retailer.

Bonds in the reseller, issued by parent company Phosphorus Holdco Plc as 10% payment-in-kind notes due April 2019, fell 55 pence on the pound to record at 30 pence in this morning’s London trading.

Vodafone has decided against renewing the deal between the two companies, which was due to expire in February and was reportedly worth £212m in revenues over the last 12 months, in favour of working more closely with Phones 4U’s competitor Dixons Carphone.

The news means that Phones 4U, which has over 680 stores on the UK high street, of which over 150 are store-in-stores in Currys/PC World, only has EE left as an official UK network partner, following O2’s decision to terminate its contract in January.

"Earlier this year Vodafone UK said it was reviewing its distribution strategies in the UK and that it would be opening a further 150 stores and creating 1,400 new jobs," a Vodafone spokesperson said.

"As part of that review, Vodafone today confirms that it will be enhancing its distribution partnership with Dixons Carphone from early next year and will not be extending its existing contract with Phones4U, which expires in February 2015. We will continue to work with a range of other indirect partners, who represent an important part of our business mix."

Phones 4U said it was "both surprised and disappointed" with the news, but said in a statement that it was already holding talks with other carriers to replace the business it had with Vodafone, although it admitted that there was "no certainty" as to the outcome.

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