Staff Reporter

When Virgin Mobiles lawyers faced their T-Mobile counterparts across the negotiating table to hammer out the dissolution of the blighted joint-venture there was little doubt they felt they were playing with a stacked deck in their favour.

While no one at Virgin or T-Mobile is allowed to divulge details of the settlement its widelyaccepted that Virgin paid T-Mobile a nominal 1 for T-Mobiles 50 per cent share.

T-Mobile must have realised that losing a further court case against Bransons empire could have cost it its entire 50 per cent stake in Virgin Mobile. The termination provision of the joint-venture would have enabled Virgin to walk away with all the shares and move the entire business to another network.

With its new contract Virgin Mobile is still free to shift its entire base to another network. But at least under the new scenario T-Mobile has received a 10-year commitment from Virgin Mobile albeit a non-exclusive one.

Thus T-Mobile gets the certainty of a solid revenue stream at least until 2014 and a share of the cake – something it would have missed out on entirely should it have lost out in any further litigation.

Virgin Mobile now has the freedom to enter into discrete alliances with other networks for different technology offerings. It could for example approach 3 and launch a 3G service using 3s infrastructure.

This would give Virgin Mobile a mix of customers. Some would be on 3. Others would remain on T-Mobiles GSM system. All Virgin subscribers would deal with the same call centre product literature and personnel but a different network would serve them.

This freedom could come at some cost to Virgin. The virtual network has denied reports it could lose up to 30 million now that T-Mobile doesnt have to pay Virgin 4.50 a month for customers who stayed inactive for up to a year.

But at least one analyst reckons that the end of the 4.50 payments under the old joint-ventures Telecoms Supply Agreement could mean 20 million less revenue for Virgin Mobile.

Apart from that it is business as usual for Virgin Mobiles 1700 employees and 3.6 million customers. The fact that the Virgin Group now owns Virgin Mobile outright clears the pipe that was clogged by legal shenanigans. It also frees Virgin Mobile to get on with new strategies and launch new technologies such as premium messaging and MMS.

Litigation

A lot of the litigation was making people walk though mud said Virgin Mobile corporate affairs chief Steven Day. There is a whole series of things that were delayed such as MMS. All of that is unblocked and we are free to manoeuvre. Youll find other services quickly coming on-stream.

The virtual network will now also expand into the independent dealer channel. When Virgin Mobile first started in November 1999 it did not have the experience resources or expertise to sell through any other outlets other than its own V.Shops and Megastores.

Over the years however this distribution channel has expanded to include supermarkets Dixons The Carphone Warehouse and more recently specialists such as KJC. Sales from these non-Virgin retail outlets now account for half of all Virgin Mobile connections.

The virtual network has also started to explore other relationships with firms such as the Gadget Shop chain. Hitherto however it has left the mainstream independent dealer channel untapped. But now that it has nearly four million customers chief executive Tom Alexander has decided the time has come to explore the independents with more adventure and intent.

Were more able to cope with more things going on said Day. In the early days we didnt have the personnel and experience to deal with a huge number of stores so we kept the operation small. Weve grown organically.

He added: Now we have a very strong sales team led by Graham Hutchinson. Weve lots of people who worked at other mobile companies who have experience of dealing with the independent channel. We now find ourselves with the capability to expand.

See Comment P14

3 has finally expanded its 3G handset range with new additions from NEC and Motorola.

The operator which has just celebrated its first birthday will offer its customers the NEC e616 and e313 and the Motorola A925 doubling the range of handsets available on its VideoTalk price plan.

The NEC e313 will also be available to customers of 3s new pre-pay offering ThreePay for 99.99.

The announcement follows an aggressive marketing campaign to kick off the launch of ThreePay as the network tries to establish itself firmly in the mobile broadband market before the other networks roll out their 3G services towards the end of the year.

While others may not have video mobiles that are ready 3 now has a portfolio of five handsets available said 3 sales director Marc Allera.

All handsets have built-in cameras can capture still images and video clips and are able to support a range of messaging formats.

The NEC handsets are both dual-band and the Motorola A925 is tri-band. The A925 a PDA that runs on the Symbian platform and the NEC e616 both support Bluetooth.

At the same time 3 has launched Today on 3 which it claims is the UKs first live video mobile news and entertainment channel.

The new channel will be updated throughout the day and will feature the latest footage available on the network from breaking news and football goals just after they are scored to music videos and film clips.

Today on 3 will give 3 customers access to an average of 72 minutes of daily footage on their video mobile including clips from Sky Sports MTV DJ Pete Tong ITN and the Barclaycard Premiership.

3 customers just hit the triangle key on their phone to access the service. It will be free to view with access to clips available to download or stream from 25p.

3 chief operating officer Gareth Jones said:

Today on 3 represents the culmination of a years experience of how our customers interact with our services.

Every day we learn more about what our customers enjoy and how and when they want to use our video content.

Today on 3 puts this into practice – combining our leading sports news and entertainment content with the mobility power and immediacy of video mobile to create the UKs first live video mobile news and entertainment channel.

This is just the start for Today on 3: it will continue to evolve and develop in order to meet the changing demands of customers.

(See Analysis P8)

Recruitment ads in the Sunday Times are offering salaries of 150000 to 250000 for the jobs as well as 100 per cent bonuses and 500000 to 1 million from the Groups wealth-creation scheme.

The 20:20 ad calls for a sales-led managing director with the enormous competence gravitas and unquenchable ambition to orchestrate our expanding global operations.

But the ads could be just a punt to lure high-fliers currently looking to move.

A Caudwell Group spokesperson told Mobile News:

The ads in the Sunday Times were nothing new or out of the ordinary. Caudwell Group is in a continuous trawl for the best possible senior management talent to run or develop new businesses or extensions of existing businesses.

The Caudwell Group in fact runs tempting management recruitment ads continuously. The company hopes the people who respond to the ads could become candidates for all parts of the business.

The phone also has integrated camera and push-to-talk facility.

The GSM Association expects to see 3G services launched by another 40 operators by the end of this year. Conway predicted there would be more than a billion GSM mobile phones in use by the end of March.

Solid foundations are in place for successful migration to 3G. Twenty-five operators are already delivering 3G services to customers in 17 countries he said.

He went on: Improvements in the supply of dual-mode handsets capable of delivering seamless inter-operability between GSM and 3GSM will provide the catalyst for the launch of at least another 40 3GSM services in the year ahead.

At the end of 2003 there were 970 million customers using GSM technology a number that is growing at the rate of 15 million per month. Almost half of GSM mobile phone users reside in Europe and Scandinavia (425 million). The Asia-Pacific region added 70 million new users during 2003. China added 42.8 million users.

T-Mobile took on 1.2 million new users including 161000 on contract. But a cull of inactive pre-pay customers means T-Mobile ended 2003 with fewer customers despite a good second half of the year.

Virgin Mobile added 506000 new customers in Q4 taking Virgins quarterly tally above O2 for the first time in six months.

O2 added 430000 new subscribers just eclipsing Vodafones 422000.

Orange only recorded a figure of 278000 net new connections. 3 announced in mid-December that it has 210000 subscribers a net gain of just 55000 since the summer attributed to stock shortages.

T-Mobile managing director Brian McBride said:

We had a strong second half to the year. Our Q4 promotions were strong and were out early in the market.

We have the highest pre-pay revenue and the second largest contract revenue per customer. The change in our commission structure has been reflected in high-quality customers joining the network. We are happy but not complacent.

The networks all recorded strong growth in data services. O2s data revenue increased to over a fifth of all network revenues. The number of text messages sent by O2 customers in Q4 exceeded two billion.

Q4 total connections

1. T-Mobile 707000

2. Virgin Mobile 506000

3. O2 430000

4. Vodafone 422000

5. Orange 278000

6. 3 55000

Q4 contract connections

1. Vodafone 181000

2. T-Mobile 161000

3. O2 145000

4. Orange 116000

5. 3 55000

Total active Subscribers

Dec 31 2002

1. Orange 13649000

2. O2 13053000

3. Vodafone 12691000

4. T-Mobile 9955000

5. Virgin Mobile 3644000

6. 3 210000

Total 53202000

He will still be based in Newbury and will report to international boss Julian Horn-Smith. Darbys role includes managing Vodafones relationship with Verizon and exploring opportunities in Latin America.

Darby is being replaced by Bill Morrow who has been in charge of Japan Telecoms fixed-line business.

Morrow an American has spent 23 years in the telecoms industry. He worked in both fixed and mobile for Airtouch and has most recently been responsible for Vodafones shareholdings in Japan.

Darby joined Vodafone three years ago from Coca-Cola. He said his biggest challenge at Vodafone had been to get the company to move away from being technology-based to being customer-based.

Ultimately customers are not interested in technologies like MMS. GPRS or WAP. They are interested in what a proposition will do for them. An example is Vodafone live! which was a genuine customer proposition behind which was WAP GPRS and m-Pay said Darby.

He added that it was vital for the dealer channel to now accept they had to concentrate on pursuing higher-spending customers who could be retained.

Independent dealers are important to Vodafone. I keep telling the ones I meet that they need to align to where Vodafones focus is.

The winners will have to move on from selling off-the-shelf solutions that seem to be just voice. We will all have to get better and better at selling more bespoke solutions and invest more in customer support and training.

The Retail Manager Share Option Plan follows an announcement by Phones 4U boss John Caudwell last year that he planned to incentivise Phones 4U managers with bonus windfalls worth up to 1 million each.

All 510 CPW store managers have been awarded 10000 share options. Around 32 area sales managers get 20000 options. Four divisional managers get 30000 options.

The options are priced at 144p per share. They can be realised from January 2007. The plan is open until the end of the year so employees promoted to these positions within this time will also qualify.

Extra share options can be earned through an incentive programme.

But poor performers are penalised. Next January the bottom 25 per cent of managers will lose half their share options to the top 25 per cent of performers.

Thus top managers could get a windfall of 37000 each if the share price rises over the next three years to 2 in 2005 2.50 in 2006 and 3 in 2007. The top area managers would get 72500 each and the top divisional managers would collect 109000.

The poorest-performing store managers would still get 3900 each while the bottom area sales managers would land 7800 and divisional managers would collect 11700.

This share option plan has been introduced for three reasons said Carphone Warehouse retail managing director Jonathan Hook.

It rewards our existing retail managers and it incentivises our retail managers based on individual performance and loyalty.

He went on: We will be opening more than 100 stores in the next year and new management opportunities will arise.

This plan is a fantastic career progression inventive for everyone working towards becoming retail managers in the next 12 months said Hook.

The Carphone Warehouses share price has risen from 95p to 146p since last March.

The event is organised by The Carphone Warehouse and sponsored by Vodafone T-Mobile O2 Nokia Siemens Unisys and Smart Trust.

Advance will see the network sharing customer relationship management data with qualifying dealers and providing them with dedicated backroom support staff and helpline numbers.

Fifteen direct independents (DIs) have been invited to join O2 Advance based on their having reached or exceeded performance criteria set by the network in five different areas.

At the launch in Surrey O2 UK sales director Mark Stansfeld said: O2 Advance is not an exclusive club. Those DIs here today have earned their place on the programme because of their performance but the programme is open to all our DI dealers. We have been very open about the criteria they need to satisfy if they are to join.

(Full report page 16)