Staff Reporter

Head office will relocate to the Waltham Abbey premises European Telecom inherited from its 15 million purchase of Banner Telecom.

ET issued a statement saying:

The benefits of this move will be reduced operating costs closer working relationships across the UK business and improved internal communications.

The impact of this reduction will be felt across the business and will result in a reduction to the overall head count of around 50 people. At the same time there will be new opportunities created. Every effort will be made to redeploy as many as possible in the restructured organisation.

The industry continues to suffer from extreme pressure on margins and over capacity in the market place. With the significant reductions in market forecasts for the (Cont P2) mobile industry our key focus is to respond to these changing conditions in order to return to profitability and ensure a sound company platform for the future.

European Telecom group managing director David McKinney added:

We are constantly reviewing the structure of the business. This is a cost-cutting exercise. It does not make sense to be located on two sites. Numerous factors determined why we decided to move to Waltham Abbey. The cost of moving availability of local skills and ownership of premises were taken into consideration.

There may be about 40 redundancies but we cant be definite at this stage until we have completed the staff consultation process. Some individuals will not want to move to Waltham Abbey. There is a mechanism in place to help staff that are prepared to move.

McKinney said ETs core business is still intact despite the slowdown.

Our core business is still strong but market conditions are difficult. We are still the leading Orange distributor. We are focusing our resources on reducing the debt burden.

Revenues are flat or down on a year ago. Whether we are at the lowest point of this slowdown remains to be seen.

We now enter the busiest part of the year and we expect to see an uplift in revenues. The actions we are taking will improve our position. Once we have restructured the business you will start to see significant activity on new business development to attack the market.

McKinney denied dealers will face disruption from the re-location despite admitting that re-deploying the IT systems could take until Christmas.

We still have facilities in Huntingdon that serve many dealers. The IT system might take until the end of the year to complete but dealers should not have any problems.

McKinney says he expects to see plenty of changes in the industry as other companies try to cope with the slowdown towards the end of the year.

You will see more announcements from handset manufacturers deciding to outsource their production lines and distribution. There will be consolidation among the dealer base for sure. The high street is a very difficult place to do business now (see White Lines).

Oftel began investigating Orange a year ago after an angry dealer complained that Orange was approaching the dealers customers after declining the customers business when it was proposed by the dealer.

The dealer supplied Oftel with Mobile News articles which had covered the story over a period of weeks.

Oftel launched an investigation based on Condition 69 of Oranges licence regarding confidentiality of customers information (Cont P10).

Oftel said:

The basis of the allegation was that when in certain instances an independent dealer contacted Orange to arrange for an upgrade or new phones for one of its business customers the customer was then contacted by a member of Oranges direct sales force who offered the customer a more attractive deal causing the dealer to lose the business.

If proven such action could amount to a breach of Condition 69 that specifically prohibits the exchange of information within the Orange business.

Oftel has conducted a thorough investigation of this issue and received a detailer response to the allegations from Orange. Oftel is aware of the action Orange ahs taken to remind staff of their responsibilities on this area and after careful consideration it has been decide to close the case. In reaching this decision Oftel has taken note of the fact that there has been no recent reported incidents of the kind oroginally complained of. The action Orange has taken in response to the investigation should if effective prevent a breach occurring in the future.

An Oftel spokesperson declined to say whether or not Orange was guilty of the charge.

We have received no further complaints from dealers. If dealers want to talk to us formally or informally we will listen to them. We will continue to monitor the situation closely and if we receive further complaints we could take action against Orange. The fact that Oftel has closed the case indicates the Regulator was satisfied with Oranges response to the allegations. The fact that Orange has reminded staff of their responsibilities does not indicate that Orange was guilty.

An Orange spokesperson added

The fact we reminded sales staff about their responsibilities shows how seriously we take these claims. Oftel has closed the case because Orange has not been found to have done anything wrong.

See Mobile News October 2 for details on booking tickets tables and special extras.

The event has sold out within days every year since 1995. Previous hosts have included Frank Skinner Bob Monkhouse and Ruby Wax.

One 2 One head of dealer sales Declan Shilton made the threat at the launch of One 2 Ones new tariffs at a secret dealer briefing at The Four Seasons Hotel in London last week.

One dealer who attended the event said:

Declan Shilton said they will terminate dealerships if they catch dealers selling OVP. They produced a slide which clearly said No OVP. Its something One 2 One is very concerned about.

The dealer briefing was organised to pre-warn dealers about a revamping of One 2 One tariffs to stimulate greater use of the network and reduce churn to other networks.

There are adjustments to monthly charges. Peak and off-peak call charges have been abolished on standard tariffs. One 2 One has reduced to 25p or 20p flat rate the cost of calling other mobile phone networks.

Precept the name for One 2 One business tariffs has been dropped.

All tariffs will bear the Anytime name except for Everyone 100 Talk & Text and Just 9.99. These are One 2 One promotional tariffs designed to combat the threat of Orange Value Promise. Orange does not replicate promotional tariffs under the OVP scheme.

The Everyone 100 minute tariff costs 25 per month and allows callers to use inclusive minutes for calls to mobiles on other networks. It will only be available until the end of December.

Reaction has been mixed to the news. Dealer Dr Jason Leighton of The Telephone Store in London said:

There are some good points and some bad. There are eight tariffs available. Thats too many. I think larger chains will find it difficult to sell because there are too many choices.

The logic behind some of the changes is good. But the end result is excessive complication. If (Cont P2) One 2 One wants to combat OVP why bring out promotional tariffs?

They should just offer to replicate their competitors tariffs like Orange does. Lower call charges between mobiles is good.

Its groundbreaking because no-one else has addressed it. For some people a mobile is their only phone. Call charges of up to 50p per minute between mobiles is diabolical.

Apart from international and roaming charges I think mobile to mobile call charges have been the biggest rip-off until now. Overall its good news for us and I think the market will respond favourably to the changes said Leighton.

A distributor who declined to be named said:

I didnt see anything new. Theres nothing earth-shattering about the changes. People want something new.

The only major point was the one price call charge to other networks.

Im concerned that One 2 One isnt launching GPRS yet. Customers need something new to stimulate them. There was nothing new being shown today.

One 2 One spokesperson Neil Bent said:

I cannot confirm or deny claims made by dealers or other persons concerning a secret dealer briefing that was supposed to have taken place last week.

One 2 Ones new tariffs launch in September a week after Orange launches its new small business tariffs.

An Orange spokesperson declined to comment on the new tariffs. But Mobile News understands they are to be launched on Thursday (August 23).

The new tariffs are Small Business 200 400 and 1000. Subscribers get 200 400 and 1000 minutes respectively for calls to fixed lines Orange phones voicemail and mobiles on other networks. Monthly charges are 25 45 and 100 excluding VAT.

Inclusive minutes can be used for calls to fixed lines voicemail WAP and non-Orange mobiles. Business customers will get a free upgrade handsets worth 68 after 18 months and dedicated customer services.

Aerofone founder and managing director Jo Marks who has purchased a 25 per cent stake in Stanhope now becomes managing director of Stanhope Communications.

The new company is now preparing for a full listing on the London Stock Exchange.

Our vision is to exploit changes in regulations and convergence of call charges for mobile and fixed line service said Marks.

We foresee a time when customers will get one electronic bill.

To maintain a secure position in independent service provision you have to have to be able to offer all communications solutions. To strengthen the enormous success we have had the last couple of years we had to offer fixed lines.

Aerofone has been voted best service provider in the Mobile News Awards for the last two years running.

The company made pre-tax profits of 3.6 million on sales of 52.8 million in the year to September 30 2000.

Turnover of the combined group is targeted at more than 100 million over the next year.

Stanhope provides least-cost routing 0800 freephone numbers and call handling facilities.

It has a base of more than 4500 clients including Jupiter Asset management M&G Group Securicor and Interflora. Stanhope chief executive Simon Hill retains that role. The Aerofone brand continues.

Orange has given BTCellnet 90 days termination notice that it will be pulling out of the BTCellnet-owned DX chain.

Orange has already confirmed it has withdrawn its services from the One 2 One-owned PocketPhone Shop chain.

An Orange spokesperson confirmed:

We have taken a strategic decision not to retail Orange phones in outlets that are wholly-owned by a competitor network.

Orange head of sales strategy and pricing Gordon Webber added:

We cant discuss which high street retailers been served termination notices as we have confidentiality agreements in place with our distributors. We have given them a notice period which is commercially confidential between us and them. We are not proposing to remove stock we will just not supply any new.

We have taken the decision to stop selling in wholly-owned (Cont P2) competitor outlets because there is a loss to Orange in terms of sales.

The number of customers connecting in outlets wholly-owned by other networks is relatively small which means that the cost associated with servicing those outlets is disproportionate to the numbers of customers attracted.

We are constantly reviewing our distribution strategy and this is a decision reached in the context of that continuing process said Webber.

The Orange spokesperson added:

Orange can confirm that it has given notice of termination of its retail trading relationship with The PocketPhone Shop.

PocketPhone Shop stated:

The PocketPhone Shop can confirm that it has been served a termination notice by Orange. In three months time Orange products will no longer be available through the chain.

We understand that this move is part of Oranges wider strategy to consolidate distribution channels and sell exclusively through independent or Orange branded retail outlets. Naturally we are disappointed by Oranges decision.

The remaining 11 stores will be rebranded by the end of November. They will receive new facades and joint One 2 One T-Mobile branding throughout the stores.

The stores will no longer sell products and services of competitor networks.

The move follows successful trials of six One 2 One stores in Bootle Harlow Nuneaton Bristol Norwich and Loughborough. PocketPhone shop managing director Andrew Fryatt has been appointed head of newly-formed One 2 One Retail and will continue his role managing the business.

Fryatt told Mobile News:

This is not a reaction to what other networks may be doing or have done. We have carried out lots of analysis and looked at various options.

We started the trials in May to gather data from those stores.The PocketPhone brand is not at all well known. From our experience with the trial stores consumers are happier when they see a very trusted name over the door. PocketPhone hasnt been a very successful name. It had no awareness and doesnt mean much to consumers.

PocketPhone shop had a good year probably better than others in the market. We have seen some businesses go into administration. We refocused on contract business and the result was a good year. The name change is not based on a poor performance said Fryatt.

We are seeing big changes on the high street with the (Cont P2) disappearance of many mobile phone retail chains. The question is in the eyes of consumers how strong were those brands?

Our own research shows that few people recognised those brands. What really matters is what consumers think. And having One 2 One over the door is very positive for us. The rebranding to T-Mobile next year is not a huge issue for us. The shop fronts are dual-branded with the T-Mobile endorsement from day one.

What is more critical will be how One 2 One communicates the name change to consumers. Pocket Phone Shop was one of the fastest-growing chains in its infancy. But that was quite a long time ago when there were only a handful of stores.

We are investing heavily in training. When One 2 One purchased PocketPhone Shop training was hugely ramped up. As part of the rebranding everyone in the company is being given more focused training because they will be selling only One 2 One products.

We want our staff to be experts on every aspect of One 2 One. They have to be able to answer all of the questions that a customer has or find the answer as quickly as they can.

It is all part of our focusing on customer service and putting the customer at the centre of what we do. We have had to rebuild our previous training scheme.

We are giving staff retail training that you would need in any chain of stores. There has been a tendency for retailers to believe that mobile phone retailing is different to other retailing and that they cant learn anything from other industries.

We can learn a lot. There were boom years where you could make money by operating badly. Now margins have tightened and sales have slowed down. Retailers need to be more professional if they are going to survive. Many mobile phone retailers are not good at stock control and logistics. Most store managers need to manually order stock.

Whereas a good retailer would have an automatic stock replenishment system it surprises me to hear people say that these types of system are irrelevant to mobile phone retailing.

We can learn from other forms of retail in how to cope now that the market has matured. Other areas of retail were fast growing but reached a peak and matured.

We are looking at opening new stores in high traffic areas but that wont be until next year. The decision on where to open stores is dependent on being able to reach as many of our customers as possible. We will have to decide the final number we require and the timeframe we will work to said Fryatt.

One 2 One bought PocketPhone Shop in Summer 2000 for 73 million from founders Simon Jordan and Andrew Briggs. One 2 One announced the closure of 23 stores in June because they were unprofitable. Fifty staff were relocated to other stores.

Walker who starts at Ora this week has been on gardening leave since April after being made redundant by European Telecom following its acquisition of Banner last year.

Walker had been working with ex-European Telecom managing director John McFarnon on special projects before McFarnon resigned in March. Walker worked with Banner for five years.

Head of mobile services Paul Lawton agreed Your Communications did not want to accept some new connections or ports until this month.

Your Communications is still recovering from a scam involving 12000 handsets that were connected but not used earlier this year. (Mobile News May 29).

Managing director Hugh Logan told Mobile News on 11 June the company had overhauled its connection procedures to eliminate future attempts by unscrupulous dealers to claim commission for unused phones after facing a potential clawback bill of millions from Vodafone.

One of the measures is the trebling of credit scoring points required for connection. Dealers accuse Your Communications of stopping connecting phones in July because it couldnt afford to pay out any more commissions until this month.

Stoke on Trent dealer John Hepworth of Garner Bennet Group said:

Your Communications has stop-ped accepting connections because the credit scoring points have been raised. Its extremely hard to process new connections.

I know they had problems with the Ilkeston Co-Op travel deal but we are trying to give them quality business. Ive got handsets sitting here waiting to go out to customers for the beginning of August and we (Cont P2) are hoping to process the applications in the next few days. One of my customers who purchased a large quantity of handsets has requested to have the international call bars removed. But Your Communications has refused to lift the bar for three months. Ive been on the phone to my dealer manager screaming and bawling because no-one would tell us what the problem is or help us said Hepworth.

Lawton explained:

This is to give us the time we need to refresh the way we work. We want to be certain that we are getting the quality of business we want from dealers and the loyalty we need.

In line with that I can confirm we have raised the credit scoring for dealers. The move has been made to protect all parties in the supply chain and yes it does follow some of the more challenging business situations we have faced in recent months. Lawton says not all dealers will find the situation workable.

There will be dealers who find it difficult to meet the new standards and some who simply cant do so. We recognise too that they may wish to complain about the situation.

Your Communications made it clear around two months ago that it was moving towards a position where it reduced the number of dealers it traded with to around 10 partner dealers. We have given due notice to those dealers that do not fit the criteria we have laid down and we are honouring existing commitments with every dealer that has ongoing agreements with us.

Mobile News reported in June that I had been parachuted in to Sheffield to restore an even keel – that is true. Thats what these measures are all about said Lawton.

Hepworth said he understood Your Communications reasons for taking tough measures

Your Communications has refused to tell us directly what is going on. I first heard the news from a dealer friend of mine. It was only when I started making my own enquiries that Your Communications told me what was going on.

Until then the only news we have from Your Communications is a visit to explain that commissions were being reduced. They intend to pay commissions based on customers call spend.

Ironically they called us to ask how much business we would be giving them this month. Its more a question of how much business they want to accept from us. They have put a stop on everything that we tried to put through. I was told they had reached a limit on the amount of commission they could afford to pay out. Ive had to connect some of my customers through other service providers.

Ive been informed that I will be one of their premium dealers but Im annoyed they left me in the dark about everything else. Ive had to put customers off because we couldnt get them connected and didnt know why. I see that they want to increase direct selling but customers prefer to talk to dealers. They dont want to go direct to the networks.

Administrators Kroll Buchler Phillips are to run the holding company to try and reduce costs and bring in the needed finances.

Dolphin spokesperson Stephen Brill told Mobile News.

Dolphin has passed into voluntary adminstration to reorganise and get protection from creditors. We want to restructure so we can deliver a stronger more viable business.

We are having trouble raising finances. Its tough for any telecoms business to raise finance right now. Dolphin is not yet a mature business. We are continuing to invest and it is important for us to draw the funding we need said Brill.

Unfortunately we have reached a point where the directors needed to take the matter to court. By filing for voluntary administration Dolphin hopes to avoid going bankrupt while the necessary finance or perhaps a buyer can be found said Brill.

Charles Aylwin of the FCS Dolphin ISP Group said: (Cont P2)

The survival of the PAMR industry in a viable form is essential. As Dolphin is taking this opportunity to restructure its finances it is clearly in everyones best interests to support the most credible way forward for the network said Aylwin.

We would expect the administrator and the regulator to objectively evaluate proposals from all interested parties. As independent service provision has been the most successful route to market for Dolphin to date ISPs will continue to work with the refreshed business. Above all the customers interests are paramount he added.

Numerous warnings have been sounded about Dolphins predicament. The company has been forced to reduce costs over the last six months due to uncertainty over funding.

The company is $1.2 billion in debt. Majority shareholder – Telesystem International Wireless is owed $400 million in loans. Infrastucture and handsets suppliers including Motorola have so far given Dolphin $115 million in credit facilities. Twelve UK banks are owed about 91 million. The remaining $600000 is tied up in bank debt and high yield.

It became apparent that Dolphin was failing in November last year. In a statement accompanying the third quarter results Dolphin admitted it had yet to secure financing needed to fulfil its 2001 investment plans.

Dolphins credit facilities with one United Kingdom bank were lowered from 215 million to 64 million after it failed to meet repayment obligations. In December the company announced it required a further $700 million of funding to carry out its plans to rollout new networks second generation handsets and maintain services over the network. It secured $300 million from TIW but has yet to raise the $400 million balance.

In addition Dolphins $250 million German Credit Facility has been lowered to $110 million the amount it owes to date.

Furthermore Dolphin announced it expects to be in breach of certain covenants relating to these credit facilities this year.