Staff Reporter

A source close to Yes Telecom alleges Jones departure was due to overspending on dealer commissions for poor quality connections and that he was unhappy at the introduction of a new business model.

Said the source:

Yes Telecom squandered cash last year on the aborted buyout of Phone People. It was also paying high commissions to dealers to quickly grow a base. But this resulted in poor-quality connections who never repaid handset subsidies. Freddie Fazelynia (Yes Telecom finance director and major investor) was (cont P2) unhappy and wont be injecting further cash in to the business said the trade source.

Curran denies this explaining:

Any service provider needs to grow the subscriber base in the first year. Freddie Fazelynia was well aware of how much we needed to invest and was happy to make the investment.

Yes Telecom started making profits within the year. It always planned to change the business plan to concentrate on value rather than connections once it had achieved this.

Colin left because he wanted to pursue other opportunities. These may be outside the industry. Ive known him for many years and I am disappointed that he has gone.

Its nonsense to suggest that no more cash will be injected into the business. It was only recently that another significant investment was made into the company.

In the summer we expect to raise further funding to increase the amount of quality connections we can take each month. Our customer ARPU levels are much higher than Vodafones threshold.

We pay our dealers higher commissions based on customers call spend. If a customer is spending 1000 per month there is nothing wrong with paying a dealer a commission in line with the true value of the subscriber. Obviously when paying high commissions there is a limit to the amount of connections we can take on each month. I wont take on connections if I cant guarantee the dealer his commission.

We are analysing the business model. If it proves to be sound we will raise further funding in the summer.

This will give us the cashflow to take on more quality connections Curran said.

Jones stated:

I left Yes Telecom because I have got a desire to run my own organisation. Within Yes I was running a company within a team of people. Ive left the company to do something else.

WAP Store boss Graham Cornhill said administrator Robson Rhodes which is currently handling the administration of Ora is expected to be appointed as administrative receiver.

The WAP Store still owes MoCo (Cell Link) around 400000 for the 20 MoCo stores it acquired two years ago.

We have still not received payment from The WAP Store. We were considering legal action but that will be pointless now. We have written the figure out of our business MoCo boss Maurice Whelan said.

Whelan believes ambitious plans to satisfy The City caused (Cont P2) The WAP Stores downfall.

I am surprised The WAP Store is in trouble. The 20 MoCO stores were profitable when we sold them to Cornhill. Maybe The WAP Stores City advisors were impatient for growth resulting in reduced cashflow. The use of the name WAP Store was a mistake. It tried to use a flavour-of-the-month name for its operation. But in this industry what is popular today will be history tomorrow.

Its also possible that Vodafones savagely-reduced commission packages caught them out. It was going to be a real blow at this the busiest time of the year.

We are sorry for the staff inherited from us. Many of them received letters saying they wouldnt be paid. We feel some responsibility towards them. There is a possibility we could re-train some of those staff and bring them back in to our business said Whelan.

Cornhill told Mobile News: There are one or two prospective buyers looking at the business. It hasnt been decided yet if the business will go into receivership or liquidation. The business may be sold as a going concern. There are a number of options available. I cant comment on the whys and wherefores until the dust has settled.

Ironically Cornhill suspected the networks changing strategies from pre-pay to contract would hurt the independent dealer channels.

He told Mobile News in the September 3 issue:

All networks are suffering cashflow problems. They have started to cut off retailers existing revenue streams to force them to swim in the direction they want. The flaw in this strategy is that they havent put alternative revenue streams in place to enable retailers to trade through the changeover period. Thats a mistake. Unless of course the networks are actually trying to burn retailers.

A lot of people dont realise how bad the situation is and the potentially fatal mess theyll find themselves in sooner rather than later. And its all because the networks have changed to a different agenda.

The scheme is called m4b (mobiles4business). Over the next three years Ternhill plans to launch 40 franchises nationwide. Ternhill boss Matt Sandford is confident this strategy will enable Ternhill to deliver more than 50000 connections to the networks. Franchisees pay an initial 19000 for their exclusive mobiles4business territory.

They receive a fully-kitted out four-wheeled mobile office (though they then pick up the leasing cost) laptop PDA data card phone comprehensive training and aftersales backup from Ternhills business team.

Crucially they also receive a thoroughly cleaned list of prospective clients who will receive mail shots and telesales calls the object of (Cont P2) which is to generate genuine sales calls for the franchisee.

A 50000 Web portal has also just made its debut.

This will enable online transactions and two-way customer communication. Ternhill plans to arrange local business breakfasts on the franchisees behalf.

By Summer m4b will have a full-time marketing manager and a field sales exec on board.

We started to develop m4b around a year ago because the networks were ramming it down the independents throats that they should concentrate on SME business.

We had already worked this out for ourselves. Though we were already primarily a business-focused company we decided to take the bull by the horns said Sandford (full story P24).

Primemark boss Asif Laher told Mobile News:

The administrator had agreed to give us access to Odysseys computers to remove the software. Last week they sent us a fax expressing concern that our removal of the software would not enable them to access records and historical data on the computers. We had an agreement to visit the Park Royal office last Thursday where all the store computers have now been delivered but that has been postponed. If the administrator continues to use FoneMan we will sue him personally.

If the administrator wants to continue using FoneMan he needs to purchase licences for the software or allow us to remove it immediately to avoid legal action warned Laher.

Leonard Curtis was unavailable for comment.

The attack happened in the early hours of Monday February 4 on the outskirts of Paris and came a few days before the heist of 23000 Samsung phones in the UK reports Bard Covington.

The lorry owned by Euro Cellulars freight forwarding company was ambushed by a number of vehicles as it entered an industrial area.

Attackers smashed the cab windows forcing the drivers to unlock the cargo.

Some of the phones have since been recovered but 1000 Nokia 8210s and 700 Ericsson T68s worth 300000 are still missing.

Euro Cellular chairman Win Donaldson predicted this latest attack alongside the 4 million theft of Samsung handsets from a warehouse in Heathrow would lead to a steep rise in insurance premiums for shipping handsets and could affect handset prices.

It will have a knock-on effect. Insurance companies are already demanding huge premiums.

These latest incidents will see premiums rise further. (Cont P2)

Its the first time one of our lorries has been hijacked in the three years weve been trading.

Im glad no-one has been fatally injured in the attack.

We have the records of the phones IMEI numbers and these will be sent to the right people.

We havent advised the networks. It would be impossible to advise every network worldwide said Donaldson (see Interview P34).

This third employee was suspended in early January (Mobile News January 21) following the suspension of a national sales manager and a dealer manager late last year (Mobile News November 12).

A third employee who was suspended has now returned to work following an investigation said an Orange spokesperson.

However Orange would not comment on whether the (Cont P2) national sales manager and dealer manager suspended for misusing company funds are still being investigated or have been sacked.

Industry sources say the two men authorised irregular connections to two Rocom dealers that went into liquidation. Rocom is still challenging Orange over a clawback claim believed to be between 500000 and 1 million because it alleges certain Orange employees authorised the connections to the now-defunct dealerships.

Rocom chairman Bob Old maintains his firms position is unchanged.

Its a stand-off at the moment. We are still doing business with Orange and enforcing clawback and receiving commissions.

However we wont accept any clawback claim on two specific accounts as a matter of principle. Senior Orange people helped set up the deals and authorised them claims Old.

The debt includes a 1.4 million inter-company loan. Administrator Begbies Traynor is attempting to reduce Celltalks 300000 monthly overheads to around 120000 and keep it trading under the Clubmobile name while a company voluntary arrangement has been proposed to creditors.

Celltalk was once Oranges largest direct dealer connecting 10 per cent of all contract handsets. The company turned over 24 million in 2000 and employed over 200 people.

It made a trading profit of 1.1 million in the first half of last year. Newly-appointed finance director Christopher Gee has left after just three weeks in the job.

In May 2000 Celltalk became an AIM-listed company. Its shares have been suspended during the administration period.

From March to October last year Celltalk had a 1 million loan facility from Orange. In return Orange had a seat on the Celltalk board which ended when the loan was repaid last October.

Orange said the 1 million facility was not used in its entirety and that the companys troubles were unrelated to events last year.

Celltalk joint founder and managing director Jess Meridith-Watts told Mobile News. (Cont P2) We will trade through this situation. The industry is in a period of change brought on by market saturation. But we are operating in an upgrade market and have been for at least six months.

Our long-term plan is to wait until the launch of 3G services which will give people a real reason to change handsets. We have grown a customer database of 320000 over the past five years. Looking after them is a business opportunity. However we dont need 105 staff to do that job.

We have restructured the business. The reductions in overheads give us a guaranteed business model. We are expecting further reductions in gross or average margins driven by reductions in commission.

Our business model is far less reliant on selling huge quantities of very fast-moving stock. In November our break-even was 7000 connections a month. We needed 2000 to 3000 high-end phones each month to do that.

We had supply problems with all the networks. But Orange and One 2 One from whom we are forced to buy stock directly caused bigger problems.

We do not now need the same volume of top-of-the-range phones. If margins stay the same we will have a profitable business.

I dont blame any network for our situation. They have also been victims of the stagnated marketplace.

Its just that the networks have more cash than we do. With hindsight we might have adapted a little more quickly he said.

Highlight of the new handset range is the new Fisio 820. This is is a high-end colour screen phone with built-in email Bluetooth and GPRS.

It is Philips smallest and lightest phone on the market weighing 85 grams and measuring 77cc.

Philips new mid-range handset is called the Fisio 620. The 820 is a GPRS phone that (Cont P2) features customisable covers screensavers downloadable ring-tones and game downloads.

A low-end phone called Fisio 121 will also be launched. This has 15 days standby time a high-resolution display and customisable fronts. The phone will most likely appear in operator pre-pay packs.

The new handset range is due to be launched at the GSM World Congress in Cannes later this month.

Philips UK managing director George McPherson told Mobile News the company was ready to relaunch itself following the sale of its manufacturing facilities to China Electronics and its Le Mans-based configuration facility to European Telecom.

We have stripped out a number of fixed overheads that will enable us to be extremely competitive said McPherson.

Selling the configuration facility to European Telecom was a good move for us. They will take the transceivers directly from the factory in China and add the keypad front and back covers and then load software for operators requirements. They pack the phone into operators boxes where required along with the right manuals and chargers.

It is more cost effective for them to do it because they can offer the same facility to other manufacturers. It is not our core competence. Our strengths are in sales marketing and defining the right products for the market.

We can now concentrate on specifying and designing wireless devices for our customers and selling them into the market.

McPherson says Philips will increase its distribution of handsets by selling phones alongside its other consumer products.

As handset subsidies decrease I expect to see our handsets on sale alongside our other consumer products in the likes of Dixons and our other retail partners said McPherson.

Dealers have also accused BTCellnets Northern Ireland distributor Dialogic of poaching customers and bouncing commission cheques to dealers.

Northern Ireland-based dealership Advance Business Mobile told Mobile News that dealers who purchased from UK mainland distributors rather than Oranges appointed N. Ireland distributor Netcom were being denied training and support.

Advance MD John Williams said: Orange is pressurising UK-based distributors to stop supplying connections to dealers in Northern Ireland.

Williams says he prefers to deal with mainland distributors because they offer a better service than Netcom.

We do not trust the local distributors because back orders arrive on the last day of the month. We have been trading with MoCo Cell-Link. We are happy with them and we dont want to be told by Orange who we can buy from said Williams.

All Orange would say was:

Northern Ireland is well served by the existing distributor (Cont P2) relationship. If any dealers are concerned about the service they are receiving we urge them to contact Orange directly so we can address any issues they may have.

However Kent-based MoCo Cell-Link managing director Ian Robinson revealed that Orange did intend to prevent UK distributors supplying dealers in Northern Ireland and had only recently agreed to let MoCo Cell-Link supply an agreed list of dealers.

Orange did intend to stop supplies to Northern Ireland through us. In October/November Orange carried out a survey of opinion and indicated it was going to stop us supplying Northern Ireland dealers. We were concerned that Orange was trying to push us out of a market that has been good business for us over the last few years.

Then in December Orange had a change of heart. But we have been told we cannot recruit any new dealers in the province because Netcom is the preferred agent said Robinson.

BTCellnets Northern Ireland distributor Dialogic been criticised by Northern Ireland dealer HH Communication.

HH boss proprietor Bryan Hamilton accuses Dialogic of poaching customers.

Its not a good sign. Other dealers have experienced the same problem. We dont trust Dialogic. It has its own shops and has been sending out mailshots offering our customers upgrades.

We prefer to deal with mainland distributors. Its harder for them to steal our customers. Especially when they dont have their own shops. We get a better deal on the mainland because the bigger distributors are pushing large volumes through.

But BTCellnet is pushing us to use Dialogic rather than someone in the UK said Hamilton.

Dialogic dealer manager John McGuigan refuted the HH complaint:

It is not true that Northern Ireland dealers have to trade only with us. There has been a misunderstanding.

We have told dealers we are the only BTCellnet-appointed dealer in Northern Ireland. This has given dealers the wrong impression that they have to deal with us. In fact they can deal with any distributor and we are allowed to trade with any dealer on the mainland.

McGuigan denied that Dialogic was in any financial trouble or that it poached other dealers customers.

A BTCellnet spokesperson confirmed:

Dialogic is our appointed direct distributor in Northern Ireland. There was a huge selection process before we chose them.

They manage our dealers efficiently and effectively. We have not heard of any problems before now. If any dealer has a problem they should approach us directly.

We encourage our dealers to use Dialogic. We are not trying to cheat dealers. Dialogic are the best people to be used because they can supply stock much quicker.

We invite some dealers to trade with us directly provide they have been trading for over two years and meet the minimum level of connections.

A company with a Euro-centric name doesnt appear to be focused on the UK said Euro Cellular chairman and chief executive Win Donaldson.

Thats why Euro Cellular decided to start afresh in the UK with a new company. We sell more internationally than in the UK.

In the UK we have been selling well through non-traditional channels. We were never that desperate to move huge volumes in the UK if that meant offering people silly credit terms.

We didnt want to buy that sort of business. Now the market has changed and we see an opportunity. The company is looking ahead at 3G and we are looking at the level of service we need to offer in readiness for it.

M-Fusion sales director Chris Savva promised next-day deliveries a freephone number and a turnaround time for enquiries of 30 minutes.