Moody’s has downgraded Phones 4u’s credit rating to Caa1 after a review that followed the retailer losing its contract with Vodafone.
Phones 4u previously had a B3 corporate family rating, but credit ratings agency Moody’s has decided to downgrade it one level because its ratings rely on it being an important outlet for mobile operators to sell through.
Moody’s believes the Vodafone agreement coming to an end has “jeopardised” Phones 4u’s status as a mobile retailer.
Phones 4u’s contract with Vodafone comprised 20% of its revenues and gross profits.
Phones 4u is under further pressure because it is facing a termination of its store-in-store agreement with Dixons in May 2015 after Dixons merged with Carphone Warehouse last month to create Dixons Carphone.
A potential end of the partnership with Dixons puts 8% of the retailer’s EBITDA at risk.
Following news its partnership with Vodafone would come to an end, Phones 4u chief executive David Kassler said: “Phones 4u continues to trade well in the market. We have high levels of market share, especially in the youth segment, and our own network Life Mobile is now fully road-tested and enjoying a great first year with customer growth ahead of our expectations.
“Independent researcher, YouGov, rated Phones 4u as number one for iPhone buying experience, which is perfect preparation for the Apple announcements expected this month.”