UK phone maker WileyFox appoints Quantuma as administrator

12 February 2018 Consultancy.uk

Following a catastrophic 2017, which saw numerous projects either delayed or jettisoned, British-based mobile phone maker WileyFox has entered into administration. The beleaguered group’s restructuring will be overseen by corporate recovery consultancy Quantuma.

The UK smartphone market has been booming over recent years. In 2017, the British market reached a penetration rate of 85% of the adult population, and consumers now spend so much time on their devices, that multiple think-pieces are even warning of spiralling levels of “smartphone addiction”, and the potential impacts this could have on business and society.

Despite this, a number of factors mean that many smartphone producers could face a challenging future. Even technology giants Apple reported a fall in sales volume in 2017 – albeit one balanced by a rise in revenue thanks to the widely criticised $1000 price tag for the latest iPhone – as competition in the ever more crowded sector sees market share split between a growing number of companies. The market for providing budget smartphones became particularly diluted, as firms like Huawei, Alcatel, and a whole host of companies sought to undercut the likes of Apple.

UK phone maker WileyFox appoints Quantuma as administrator

In this increasingly combative sector, Britain’s only mass market phone maker, WileyFox, has entered into administration, a mere three years after its launch. The company which opened for business in 2015, was quick to position itself to cater to the growing trend of non-contract handsets, with its series of low-cost devices, including its Storm and Swift models. A turbulent 2016 saw the firm forced to jump quickly away from the Cyanogen OS, after the operating system collapsed amid licensing issues.

In Spring 2017, WileyFox adopted a more standard Android alternative for some devices, although more problems led to a two week delay for the launch of its new Windows-based handset at the end of the year. However, what really seems to have compounded the smartphone producer’s woes is their primary source of funding being severed at the turn of the year. WileyFox’s holding company had largely been backed by Russian bank Promsvyazban (PSV), which received a bailout from Russia’s Central Bank, just as WileyFox struggled to release its WileyFox Pro device. As a result of the bailout, special measures were placed on PSV, which restricted its lending outside of the country – leading to WileyFoxes working capital being ‘temporarily suspended’, with no resolution in sight.

No further details have yet been made public. However, a Reddit user named 'Wileyfox-Jack' has widely been cited as saying that Wileyfox smartphone users are likely to be stranded without any future OS updates "unless something drastically changes", including the new Wileyfox Add-X range, a series of budget mobiles which feature adverts on their lock screens, to help bring down prices sustainably, which had recently been listed as Amazon's 'Innovation of the Month'.

Quantuma appointed

Michael Coombes, the group’s CEO, confirmed that the vast majority of its employees have subsequently been made redundant. Following the termination of 20 staffers, in a bid to rapidly reduce operating costs to the bare minimum, just six will remain at the company to assist administrators in their viability assessment.

In an email circulated by the press, Coombes said, "The purpose of the administration is to restructure the Wileyfox Group, reduce its cost base in Europe and to ensure its long-term future across all the markets it operates in.”

Professional services firm Quantuma will now work to restructure the firm, with the corporate recovery business advisory’s Andrew Andronikou and Andrew Hosking being appointed joint administrators. Hosking is also understood to have been made a joint administrator alongside Sean Bucknall, as Quantuma secured a 12-month extension to its term overseeing the administration of King & Wood Mallesons' failed European arm, in January.

Quantuma was also recently at the heart of the turnaround of Bedworth Haulage. A total of 21 jobs were saved at the Warwickshire haulier, after the business was sold out of administration. Now, Quantuma seems to be hitching its plans for WileyFox on similar hopes.

Andrew Andronikou said of the challenge ahead, “We are looking at prospective interested parties to buy the goodwill and IPR associated with the business to take forward the operations in Europe.” Hinting at areas where further savings could be made, he added, "Distribution of the handset hasn't been successful, it hasn't penetrated the market in accordance with the time set out [by management]. They still had to spend a lot on marketing.”

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