EE stung by £336m bill from Phone4U

December 12th, 2019

With the collapse of Phones4U, one of the largest phone providers in Britain, EE, will be more than £330m out of pocket.

The commission money was paid to Phones4U in return for booking customers onto EE data packages, with expectation for the money to be back with EE with interest within a five year period. However, with the collapse of the company and the write-down of Phones4U’s assets, EE will not be able to re-coup the losses.

BT found out about this debt when information was disclosed as part of their almost £13bn takeover of major phone retailer EE.

It was a key factor in EE’s 22% drop in profit from 2013-2014, but EE and BT were aware of the investment and the planned return period, before Phones4U went into liquidation.

The £330m commission was for Phone4U to sign, service and retain customers so that over a period of time, EE would see the return come back with contract payments and repeat custom from happy contract owners. An EE spokesman commented saying that they made the decision to pay the whole cost up front rather than in installations, as it meant a better return on the investment. Of course, had they chosen to pay instalments, they would not have lost quite so much.

It has not all been a negative story for EE however. They were able to buy 58 empty stores from Phones4U at a much reduced price which has helped to expand their retail high street presence.

There are also rumours of potential legal action, with claims that Phones4U management and investor BC Partners could have seen the fall coming. Debt experts Stonehill Capital management, has bought the files and data gathered by Phones4U and could use these to find out if any claim could be brought before those involved.


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