Staff Reporter

Speaking exclusively to Mobile News in a rare interview Edmonds said:

To accuse me of being naive demonstrates a naivety on the part of those making the accusations. No ones ever made any such allegations to my face.

Im quite happy to invite anyone who feels that way into my office to discuss why they think as they do.

Lets take a look at what Ive done in the last six months.

I produced the Review of the Mobile Market. Is that a naive document?

No. It is a penetrative analytical piece of work that takes the economics of the mobile market down to first essentials and builds up a case as far as most of that marketplace is (Cont P2) concerned for not making it subject to regulation.

That review led directly to mobile operators being able to offer a wider range of product without in the vast majority of cases that product being subject to any price regulation. Was that naive?

No it was a huge step forward.

Where did I step in to regulate? I intervened over calls to mobiles because there was conclusive evidence that the prices being charged are very much higher than should have been the case.

Thats not naive. It is taking action after a thorough appraisal of the facts and the market concluded Edmonds.

The boy Michael Austin was given the phone as an exchange unit which Carphone Warehouse obtained in good faith from Club Nokias Merryhill service centre.

Mobile News recently exposed a loophole in Club Nokias procedures which potentially allowed faulty stolen handsets to be exchanged for new units.

This was because some Club Nokia service centres did not ask customers for proof of purchase on handsets less than 15 months old (Mobile News February 18).

The Carphone Warehouse issued an apology saying:

The Carphone Warehouse would like to again apologise sincerely to Michael Austin and his family for this very unfortunate incident.

The Carphone Warehouse received the exchanged handset in good faith from the manufacturer and had no reason to believe that it had been stolen.

This incident has highlighted a loophole within the mobile phone industry.

There is currently no central database that records blacklisted and stolen handsets and until this is set up this situation risks reoccurring.

The Carphone Warehouse is willing to take on the cost and management of such a database and has been urging the networks to urgently work with us to make this possible.

We have already made considerable progress with two networks and urge the other networks to start working with us on this as soon as possible.

The vending machine is due to be trialled next month in the forecourt of a Texaco petrol station. If the trial is successful the machines could be installed at other Texaco stations nationwide.

The vending machine accepts credit cards and currency in pounds and euros. The machine authenticates card transactions by connecting over Vodafones GSM and GPRS networks to the banks. Phone Kiosk hopes to sell the machines into other retailers and operators.

Telement teamed up with Phone Vending to adapt the design of the pre-pay voucher vending machines it supplies to operators and retailers so that it can handle mobile phone accessories and pre-pay mobile phones.

The machine could also dispense the new wave of disposable mobile phones coming into the UK this year.

Priman says the only way retailers will make any money out of low-margin goods is to automate the sale.

Margins on accessories are getting lower and it makes sense to sell them through a machine rather than over-the-counter. Its not cost-effective to have a member of staff on hand to sell low-margin goods that could be dispensed from a machine at a lower cost.

Priman says he conceived the idea while working at the Pau brothers former FoneRange company prior to its liquidation and the sale of its brand name and customer base to Elite.

Three years ago (former) FoneRange launched a concept accessory vending machine at CeBIT. There was a tremendous response to it but it never came to market. The concept was principally my idea and I was in charge of the project.

It is a good concept because there is less margin on a number of products especially top-up vouchers. It is hardly worth retailers selling them for such a low margin.

If you can automate the retailing process it is an excellent opportunity. And the machine will operate 24 hours a day seven days a week Priman says.

The Spring training roadshows will be held nationwide. Events will concentrate on products and services mobile data future developments business-to-business and retail sales skills.

Each course is led by a professional Orange trainer and hosted by a European Telecom account manager.

These courses are designed to arm dealers with the knowledge and tools to make the most of the opportunities available said European Telecom director of group sales and marketing John Drinkwater.

When Generation Telecom bought failed Anglo Communications customer base some corporate/SME subscribers had direct contracts with Anglo.

The remainder were connected through dealers who acted as VSPs. The customers relationship for billing and other services was with the dealer rather than the actual service provider or the network.

Generation Telecoms VSP dealers have been given three options: sign up to the Generation Telecom Strategic Partnership for ongoing revenue payments of up to seven per cent of the total bill for the life of the customer have the PAC codes released to them or sell their customer base to Generation Telecom.

Subscribers who have not been opted in to one of the three options by April 1 will be disconnected.

Generation Telecom MD Keith Westcott MD told Mobile News:

Working with the dealers as traditional VSPs doesnt fit with our strategy. Reaction to the letter we sent our VSP dealers has been mixed.

Wed already started to change terms and conditions compared to what the dealers were enjoying from Anglo. We simply couldnt carry on the same way.

You only have to look at what happened to Anglo to see why. Dealers respect that.

Whether the virtual service provider as a concept is dead is in the hands of the few organisations that continue down that route.

We prefer not to have any grey areas when it comes to who owns a subscriber. Thats impossible with virtual service provision. We are happy to continue to work with (Cont P2)some of the VSP dealers through an indirect strategy which will continue to provide them with an ongoing revenue stream said Westcott.

Westcott added that the decision to dump virtual service provision was a strategic decision and not connected with the quality of the companies it partners.

VSP doesnt sit easily in our portfolio. We have not left our dealers in the lurch. Weve given three options and plenty of notice. Weve been in dialogue for a while. This hasnt come out of the blue. No ones being left high and dry said Westcott.

One of the affected dealers John Hepworth of Stoke-based GB Phone Solutions said: I can see both sides of the argument. I dont feel desperately badly done by – Ive found somewhere else I can put the business. However we werent given the three months notice stipulated in our contract with Anglo.

But he added: Its not as if Generation Telecom has cut us off overnight. Weve got six weeks to sort things out.

Generation Telecom did not understand the complexity of the VSP proposition when it acquired the Anglo Communications business. Im not too sure that it understand dealers that well or the way that we work. It sent us a contract to sign. It was a very one-sided document. No dealer that I know of signed it. Generation Telecom decided that it would scrap the VSP package completely.

Hepworth detects the influence of Vodafone in all this.

Vodafone does not like anyone other than itself having ownership of the customer. The network is not a big fan of dealers reselling its services.

Hepworth remains committed to the concept of virtual service provision delivered by dealers.

No matter what kind of problem our customer has we will sort it out personally. Hes not connected to a call centre in India.

Call centres may be OK for the consumer but not for businesses and SME customers.

Our customers are prepared to pay us a little bit extra for the element of service and flexibility we deliver.

Mitsubishi has announced its intention to axe its former European telecom division and replace it with a new company next year to concentrate on R&D and marketing of new high-end GPRS handsets to be built in China.

Our intention is to fulfil all orders. All the different markets are working to fulfil customers orders for handsets a Mitsubishi Electric spokesperson said.

French law prohibits a company from discussing the situation until an agreement has been reached about employees futures.

Mitsubishi Electric had announced its intention to close the factory in Rennes. But the protracted French legal system has slowed negotiations which are still ongoing.

A final agreement between all parties could be reached by the summer.

Yerolemos Yerolemou (41) acted for brothers Andrew and Christopher Nicholas who were last November found guilty of a 10 million VAT fraud run through their north

London company Universal Cellular Communications.

Police had raided Yerolemous law firm at 77 Stroud Green Road Finsbury Park North London. He was not charged with any criminal offence but it is alleged he held legal aid money totalling 3237 in his office account failed to properly protect funds of various parties in the client account acted in conflict of interests and compromised his independence and duty to act in his clients best interests.

Andrew Nicholas was bankrupt but used the name of his girlfriend (Anita Kearns) to shift hundreds of thousands of pounds through Yerolemous practice.

A Law Society investigative accountant David Shaw inspected the firms books on March 18 1999.

On November 11 of that year police and VAT investigators searched the offices. Yerolemou was told the following June he would not be prosecuted.

Law Society representative Jon Goodwin told the Disciplinary

Tribunal that Yerolemou allowed significant amounts of money to be deposited in his client account and then paid the money out without any real transaction and without questioning the withdrawals.

On November 13 1997 475000 was paid into the solicitors client account apparently as a deposit on a country club. But the money was then paid out to another company on the same day.

The tribunal heard the Law

Societys investigating accountant found a series of payments to a company called Microtype Kearns and another company. He denied knowing Microtype was controlled by Nicholas.

He did not ask obvious questions because he either knew the funds were under the control of the bankrupt or chose to turn a blind eye Goodwin said.

At the very least he should have sought an explanation about where the funds were coming from and the connection between the companies and Nicholas.

Investigative accountant David Shaw said:

He (Yerolemou) misled me. If there is money coming in from a limited company it is interesting to ask who is in control of that company. He should have inquired whether Andrew Nicholas was bankrupt.

There are many facets to this inquiry that should have aroused more query.

Yerolemou denies the allegations.

He told the Tribunal he was involved in obtaining five shops for mobile dealership Celltalk which was later sold to Talkland for 150000.

But it merged that Celltalk which had been set up by the Nicholas brothers had defrauded Customs & Excise by selling phones with VAT and then disappearing before handing over the tax to the Government.

Yerolemou was asked about that fraud but said he had no idea about it.

He also claimed he did not know about Andrew Nicholas bankruptcy.

I had no idea whatsoever. I was never told by him about anything to do with bankruptcy.

He said he was introduced to the Nicholas brothers by Celltalks accountant.

They were very demanding and wanted things done quickly. I was instructed by them in the acquisition of leases from where they would retail mobile phones. They had five shops.

When asked about the police and VAT investigation he told the

Tribunal:

I naively assumed it was not me who was being investigated.

The hearing continues.

There are two votes. All of the creditors get to vote including the directors who are owed 700000 in unsecured loans and the holding company (not in administration) that is owed 1.2 million.

We only need another seven per cent of the votes but I am confident we will get 100 per cent.

We also expect a similar result for the second vote even though the directors and holding company are not included.

I expect the company to be out of administration on April 1 said Meredith Watts.

Manchester-based Celltalk went into administration in February with debts of 3.2 million.

Insolvency firm Begbies Traynor has reduced Celltalks monthly overheads by half and put together a plan that would see it continue trading as long as the company paid 100000 a month for two years to meet its debts as well as half its profits.

Pegler was appointed by Orange last year to assist in Celltalks restructuring plans and determine whether Orange would accept Celltalks application for further credit facilities after Celltalk went in to administration with debts of 3.2 million.

Orange later installed Pegler as Celltalks interim chief executive when the restructured (Cont P2) company exited its administration in March 2001 after creditors gave it approval to carry on trading. Pegler left Celltalk in September 2001.

Orange purchased a 28 per cent stake in Mainline last year for 2.3 million following a joint three-year development of Mainlines specialist dealer initiative called m-viron.

Mainline opened its first batch of six m-viron stores last summer – a number that has since swelled to 21 – with further openings planned this year.

Boden and Pegler both deny that Mainline is in trouble. They insist that Peglers role at Mainline is purely to help Mainline develop its business strategy for the coming year.

Boden told Mobile News:

Ian Pegler was heavily involved in Oranges acquisition of shares in Mainline back in 1999. Pegler runs a management consultancy and we have employed him because he understands both Orange and Mainlines businesses. He is the ideal person to help us take Mainline forward this year.

Finance director Ian Hodgson left the company by mutual consent. Ian Pegler has been looking after the company while I was away on holiday.

The rumours have arisen because Ian Pegler was implanted by Orange at Celltalk to oversee its coming out of administration. People may have assumed he has come in to do a similar job here. That is not the case. Ian Pegler has been employed by Mainline and is no longer working for Orange said Boden.

Pegler told Mobile News that his role at Mainline had nothing to do with any financial situation.

Mainline is performing well. My role is to advise the company on future strategy.

There are no financial issues at Mainline. My role at Orange in particular Celltalk is the exact opposite of what is happening at Mainline. I joined Orange in 1999 to oversee possible retail acquisitions. I had a hand in Oranges acquiring of shares in both Midland and Mainline Distribution.

Orange asked me to be the interim chief executive of Celltalk in February last year because Celltalk had requested financial help.

I was asked to be Celltalk chief executive on behalf of Orange until I left Celltalk at the end of September 2001. During my time at Celltalk it paid the entire loan back to Orange and remained profitable Pegler adds.

PNC chief executive Ian Gray told Mobile News:

We have identified 20 to 25 towns within the southwest where we would like to open new stores. A number of exciting new products coming through such as camera phones will bolster sales later in the year. Mobile phone sales are a core part of the business and remain highly profitable.

The refurbishment will mean some stores will be closed for a minimum of two days. This will allow the whole interior of the stores to be upgraded with a new store layout new signage new display (Cont P2) units and a new interior design and colour scheme to make the store more appealing to customers.

KJC marketing director Crispin Thomas told Mobile News:

We trialled the concept in a number of stores. This yielded a noticeable performance increase in the stores. The work will commence in September and we expect to complete this by April next year said Thomas.

The news comes as PNC published its interim full-year results to March 31 2002. PNC says its turnover increased by 12.5 per cent to 57.6 million.

KJC stores reported increased mobile phone connections to an average of 12666 per month compared to 11809 per month in 2001.

PNC says 70 per cent of mobile phone connections were on contract rather than pre-pay.

Within the financial report published at the end of last month PNC chairman Lord Stevens said this had been the toughest year for the telecoms industry but was optimistic that the market conditions would improve. He wrote:

Mobile and fixed telecommunications have had the most difficult year in their history.

The market continues to be highly competitive. However there are signs of a better future.

PNC shut its mobile phone wholesale business English Telecom after its profits for 2002 halved to just 1.2 million. PNC also sold its internet division including the customer base of its Web portal smartone.co.uk to London-based Intelliplus Holdings in order to focus on its mobile phone retail business premium-rate numbering and least-cost call routing operations.

It is currently embroiled in action against former chief executive Darren Ridge over the alleged misuse of company funds a claim Ridge denies.

KJC has also appointed North London service and repair company Intec as a repair centre for its 51 retail stores.

The deal which started last week will see around 1000 handsets a month sent to Intec. KJCs repair service was previously looked after by various companies including Premier and MPRC.

KJC general manager Alan Holman said:

We decided to use Intec because it has more accreditation with handsets. We found that if we sent handsets to Premier they would end up going to Intec anyway so it made more sense to go direct.

The deal adds to Intecs service business which currently includes Vodafones 360 retail outlets as well as a number of independent retailers.

Intec business development director Charlo Carabott says: We are delighted to be working with KJC. We believe our accreditation with 16 handset manufacturers and our good track record helped.