Phones 4U administrators hoard £130m to take on mobile giants

THE administrators of Phones 4U have built up a £130m war chest to fund a legal assault on mobile operators accused of colluding to trigger the retailer’s collapse.

A progress report reveals that PWC has “purposefully retained significant cash reserves to fund any litigation that may be required in respect of these claims”. The administrators have £130m in current accounts for companies that were part of Phones 4U and have told creditors much of this “is held as a reserve to fund the claims”.

Phones 4U, owned by the private equity firm BC Partners, went under four years ago after O2, Vodafone and EE all pulled out of the chain, leaving it without handsets or contracts to sell. PWC and the US law firm Quinn Emanuel have been investigating allegations that the operators unlawfully colluded to cut Phones 4U out of the market.

O2, Vodafone and EE have denied any wrongdoing, but as the administration progresses there is no sign that PWC intends to drop the potential claims. The administrators now expect to recover as much as 56pc of the £430m owed to the owners of Phones 4U’s high-interest bonds, up from 44pc a year ago.

The figure has been boosted by victory in a separate legal battle with EE over ongoing commission on mobile contracts, which yielded £120m earlier this year. Pwc’s most optimistic current estimate does not include the outcome of potential collusion claims, however.

It sent pre-action letters to operators two years ago but it is understood there has been no further correspondence since. The legal fallout could continue for years.

Bondholders are separately considering a claim against BC Partners over the way it ran Phones 4U, including the extraction of a £200m special dividend months before its collapse.

Operators pulled out of Phones 4U one by one amid shifts in the mobile market that meant independent retailers were viewed as an expensive channel. After initially benefiting from its rival’s collapse, Dixons Carphone is now facing similar pressure as it attempts to renegotiate its deals.