Wileyfox, a prominent manufacturer of sub-£200 smartphones in the UK, has gone into administration.
This follows the loss of its core source of investment and an increase in competition within the budget smartphone sector.
Here, we’ll explore the circumstances that contributed to Wileyfox’s insolvency, and what this might mean for the company and its customers.
Who is Wileyfox?
Wileyfox is a smartphone manufacturing company that specialises in low-cost handsets that don’t require a contract.
The company launched in 2015, and since then it has grown steadily in popularity thanks to a strong focus on social media campaigns.
Wileyfox was one of the first companies to build smartphones using the Android Cyanogen mobile operating system. However, when Cyanogen collapsed in 2016 due to licensing issues, a period of turbulence began for Wileyfox.
Why did it go into administration?
On 5 February 2018, Wileyfox Europe Limited, a subsidiary of the Wileyfox group, went into administration.
Between 30-50 people lost their jobs in an attempt to minimise operating costs. Six members of staff will remain to assist the administrators.
A number of factors contributed to the company’s insolvency, including a highly diluted marketplace. Brands such as Huawei and Alcatel have recently released several budget smartphone models to undercut big players like Apple, who has just launched its $1000 smartphone.
Cyanogen’s collapse meant the way Wileyfox phones operated had to change. It even developed its own Read Only Memory (ROM) to compensate for this.
However, the main thing that caused the company to enter administration was the collapse of its principal backer, the Russian bank Promsvyazbank.
The Central Bank of Russia saved Promsvyazbank. However, this was on the condition that the bank would limit lending outside of Russia. Therefore, Promsvyazbank was unable to continue to support Wileyfox’s ventures. Their working relationship ended in December 2017.
Michael Coombes, CEO of Wileyfox commented that "PSB collapsing in December was a surprise, we’ve been forced into this until we can fix it.”
The April 2017 accounts show that the company has a current operating loss of £1.5 million. According to Credit safe, Wileyfox’s assets have dropped 89.6% from £1,846,233 to £191,270.
Who are the administrators?
Andrew Andronikou and Andrew Hosking have been appointed as joint administrators for Wileyfox. They are part of the professional services firm Quantuma.
The administrators have stated they are “looking at prospective interested parties to buy the goodwill and IPR associated with the business to take forward the operations in Europe.”
They have also hinted that market penetration and distribution have not been as successful as the directors had originally hoped. These will be the two primary concerns when restructuring the business.
What does this mean for Wileyfox customers?
Coombes says that the company will “restructure and continue” so handset owners should not worry.
“Customer service will continue in regards to repairs and updates. There will be a couple of days where we cease operations due to administrative process”.
Generation three devices and the Wileyfox Pro will still launch in 2018.
It seems that the company will continue trading until the restructure is complete. However, with minimal staff, customers should expect a drop in operational efficiency.
If you are concerned about insolvency or administration, get in touch with our company turnaround experts today.