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BT boss denies discussions to ‘starve’ Phones 4U

·3-min read
Phones 4u mobile phone shop on Oxford Street
Phones 4u mobile phone shop on Oxford Street

A BT executive who worked at one of Britain’s biggest mobile giants discussed how the collapsed retailer Phones 4U could be “starved” if his company and others abandoned it, a court was told.

Marc Allera, head of BT’s consumer arm, was on Tuesday cross-examined over allegations that he and fellow executives at mobile subsidiary EE schemed with rivals to destroy Phones 4U.

At a High Court hearing, he repeatedly denied he had been tipped off that Vodafone was set to pull its products from Phones 4U in August 2014, a move that dealt a major blow to the retailer and left it reliant on EE as its only remaining partner.

By that point, Three and O2 had also ditched their contracts with the chain.

EE dropped its own contract with Phones 4U soon afterwards, prompting the retailer to collapse into administration in September and putting 2,000 jobs at risk.

Administrators for Phones 4U argue that EE, Vodafone, O2 owner Telefonica, Deutsche Telekom and Orange “brazenly” conspired to drive the retailer out of the market and boost their own profits.

The companies all deny the claims, which have been dismissed by defence lawyers as a “conspiracy theory”.

On Tuesday Mr Allera was grilled about internal documents and meetings, with Phones 4U’s lawyers arguing that he knew in advance that Vodafone would pull its products from the retailer.

One email from May 2014 recounted how Mr Allera and a colleague, Stephen Harris, had met with Orange and Deutsche Telekom, EE’s former owners, to discuss ongoing talks with Phones 4U.

Summing up the conversation, an Orange employee wrote that Mr Allera and Mr Harris had said that if EE and Vodafone both abandoned Phones 4U, the retailer would be unable to plug the void with smaller mobile partners.

“Then, 4PU [Phones 4U] will starve,” they are said to have added.

When asked by Kenneth MacLean QC, representing Phones 4U, whether those were his words, Mr Allera replied: “I would not have said that.”

He insisted he had no recollection of Mr Harris saying it either and could not account for Orange’s claim.

Asked whether he had inside information from Vodafone, he said: “No… There was speculation but never any direct information from any operators.”

During the cross-examination, Mr Allera also rejected claims he had “strung along” Phones 4U with negotiations about extending EE’s supply deal, even as it became clear his company was set to ink an exclusive tie-up with rival retailer Carphone Warehouse.

In an August 2014 email setting out what EE should tell Phones 4U about the prospect of a deal, Mr Allera said they should deny reaching agreements with anyone else.

It was sent on the same day that Mr Allera and EE agreed in principle a new deal with Carphone Warehouse, although this was subject to approval from EE’s board.

Mr MacLean accused Mr Allera of “deliberately misleading Phones 4U”.

But Mr Allera said: “I was negotiating in parallel with two retailers to get the best commercial outcome for my business.”

His reply prompted the judge, Mr Justice Roth, to specifically ask whether it was actually true that EE had no deals with anyone else.

“No, my lord,” Mr Allera said, but insisted it would not have been “a good strategy” to disclose the deal with Carphone Warehouse while he was still negotiating a “backup” agreement with Phones 4U.

Mr Allera said EE was dissatisfied with the terms of its deal with Phones 4U.

He wanted Phones 4U to pay a bigger licensing fee but grew “frustrated” when the retailer insisted it could not afford to do so - even though it had just paid a dividend worth more than £200m to its private equity owner, BC Partners.

The trial continues.