Staff Reporter

There are 60 million SIM cards in the market and an estimated churn of 20 per cent each year said EasyMobile chief commercial officer Sandy Munro. That means there are 12 million switching customers available each year which equates to one million per month.

Online sales make up five per cent of all sales in the sector including high street and network sales.

EasyMobile chief executive Frank Rasmussen said that the figures vindicated the service after reports that it had only managed to attract 5000 customers in two months.

Not only did we manage to implement the service in two months but we have made an impact on the UK market he said.

EasyMobile informed customers it now reserves the right to close the accounts of customers with more than five SIM cards. It also said that it would use credit reference agencies at sign-up or upgrade of services from now on.

Were in discussions with three companies about a possible acquisition said Sendo CEO Hugh Brogan. I cant confirm which but talks will be concluded within a matter of weeks.

According to Brogan Sendo has been looking for investment since the beginning of the year. We eventually reduced the number of suitors to two with one clearly at the forefront and then 10 days ago a third company got involved which has opened things up again.

Motorola appears the most likely to acquire Sendo the only British handset manufacturer though Emblaze is also understood to have held talks with the company.

Motorola declined to comment.

Emblaze CEO Laurence Alexander said: I know Hugh Brogan very well and have spoken to him a number of times during the past few months.

An industry source said: Motorola is the hot favourite and it makes sense because it would like Sendos Series 60 technology. But I also know that Sendo held talks a few months ago with Emblaze as well though they ended badly. Talks between the two could however have been re-started.

Sendo which supplies handsets to Vodafone has been embroiled in court battles in recent years. It was at the point of launching the first smartphone with a Microsoft operating system when it discovered that Taiwanese manufacturer HTC was ready to unveil its own Windows-based handset in the form of the SPV on Orange.

Sendo started legal proceedings for patent infringement against Microsoft a Sendo shareholder before settling out of court. It also took Orange to court.

Sendo should have been more humble treated Microsoft as a partner and not taken it to court added the source.

It could have effectively been a development house for Microsoft and kept it on as an investor instead of going it alone and going to the wall. It also put to bed any chance of doing business with Orange by taking it to court.

Instead of stealing a march on other manufacturers with a Windows smartphone it took it another year-and-a-half to launch the X with a Series 60 platform. It was a bit ambitious. It gave it a good crack. But who is making money in manufacturing now apart from Nokia and a few others?

Sendo which has a 1.5 per cent share of the global handset market has appointed restructuring company Kroll to advise it following an acquisition. Sendo has 330 staff and a sales forecast of 6.5 to 7 million units this year. Brogan said that no redundancies would occur.

The restructuring depends on which deal we choose said Brogan. But the intention of all three parties is to retain the R&D workforce in Birmingham. Certainly no job cuts have been made so far.

The brand appears likely to go however.

We have been trying to raise cash since the beginning of the year he added. Frankly because the business has grown like hell since the beginning and most notably in the past year it has created a strong demand for an injection of cash.

Global shipments were 1.6 million units in 2003 and 4.5 million last year he said.

To fund the growth we would have to increase the cashflow to the company from somewhere else – whether through investment or a public offering or by funding the growth ourselves said Brogan.

Brogan started the company six years ago in an office at his home. It now has a presence in 40 different countries. Last year the firm grew by 300 per cent which put an enormous strain on the company.

Sendo has proven that you can start something with nothing in this industry still and build it up to a global presence even if it is not a global competitor as such said Brogan. We have never been properly funded. The whole thing has been done on meagre money compared with our competitors. You need a brand if you are going to operate in the market at the highest level.

Brogan added:

Im 41. I have plenty of gas left in the tank. I will take a break and gather my thoughts but I wont leave the industry.

A young woman wanted to get two Sony Ericsson K608i phones on 3 said Fone Doctor owner Faisal Sheikh. All she cared about was getting the phone for free she wasnt bothered what tariff she went on.

While he was helping her another woman came in wanting the same deal. Both produced bank cards from one bank and bank statements from another.

Sheikh discovered both cards had been stopped. He called the police and stalled the women until they could arrive.

They both started crying and said theyd been put up to it by a third party and they were handcuffed and taken away.

In June a woman who tried to connect a Nokia 6680 to 3s Talk and Text 900 plan at Fone Doctor was arrested.

Sheikh added: Identity fraud is a huge problem especially on 3. Despite my vigilance I have 36000 worth of clawback from 3 in the past couple of months.

The report claimed Caudwell had appointed NM Rotchschild to sell the Caudwell Group.

The consensus was that the group would only be likely to be sold in its constituent parts.

The jewel in the crown is 20:20. Phones 4U is struggling and the shops are all on short leases said a senior Carphone Warehouse staffer. The networks already have their own retail presence. 3 has been mentioned as being a possible buyer but [chief operating officer] Gareth Jones has told us he has no intention of owning a chain of high street stores.

He may get an approach from a private equity partner. But I doubt any existing company in the mobile industry would be interested.

A Vodafone executive endorsed the view that the networks would not be interested in Phones 4U as they had already established their retail presence.

Ovum principal analyst John Delaney said:

Its wise to approach unconfirmed press stories about Caudwell with circumspection. However this one seems to be solid and makes some sense. The UKs mobile phone retail market is intensely competitive and is getting more so. The mobile network operators direct retail stores have become a prominent feature on UK high streets. Tesco Superdrug and WH Smith have also moved into mobile retail in various ways making it harder still for Phones 4U to grow either market share or profit margin. If Phones 4U is up for sale it would seem to indicate that Caudwell is not thrilled about the prospect of eroding his hard-won personal fortune to fuel the increasingly steep uphill climb to grow the Phones 4U business.

Delaney added: Perhaps hes decided that hed prefer to take the cash and let someone else try as he did with service-provider subsidiary SinglePoint which he sold to Vodafone for around 400 million. It seems that hes looking to repeat that coup on an even larger scale.

One option could be that Caudwell might approach a rival distributor and/or retailer to take over the running of the group.

Meanwhile Caudwell is proving uncontactable by journalists. All enquiries are being routed to David Ginivan group head of Caudwell PR who is telling the media:

We dont comment on market speculation about acquisitions flotations or disposals of any kind. The Caudwell Group has always been surrounded by speculation. I have no comment.

See Business Watch page 14;

White LInes page 48

Digicel won a licence in June this year in a spectrum auction and is currently building its network infrastructure going head to head with Cable & Wireless Brewers former employer. 

Brewer walked out of his Cable and Wireless job three months ago after Cable & Wireless director of international business Harris Jones appointed ex-Phones 4U marketing manager Paul Hamburger to a role in charge of Brewer. Jones and Hamburger had both worked together at T-Mobile. Hamburger became commercial director of Caribbean operations requiring Brewer to report to him. Brewer resigned remaining in Barbados on six months gardening leave.

Brewer is best known for his high profile jobs within Cellnet France Telecom and ircell.

Denis OBrien founder and chairman of the Digicel Group commented: Stephens leadership and experience in the telecommunications industry position him to successfully lead Digicel to become the number one mobile telecommunications company in Trinidad and Tobago. We are focused on a rapid rollout of innovative services that will give customers the opportunity to choose a service provider that offers added value superior customer care and wider coverage.

OBrien launched Digicel in 2001 after selling his Irish mobile network Digifone to O2. The company already operates in eight Caribbean countries including Jamaica Barbados and Grenada and is to expand shortly into Haiti.

See White Lines page 48

The public often dont understand their rights or how valuable a shot might be. They sign away the universal rights to a picture for a nominal flat fee. It could then be syndicated around the world.

Scoopt members retain copyright to their photographs and receive half every licensing and syndication deal. Members submit pictures by MMS to a shortcode or they can e-mail them via a PC.

(See Comment).

Intec is geared to being a large-volume business said Intec managing director Harry Ramis.

When Vodafone moved some of its volumes out it was a wake-up call particularly on costs he added candidly. We replaced much of that volume but we need to re-shape. Joining forces with Fonebak can only help.

Ramis has stayed on as managing director and insists there will be no changes to the structure of the business or to staff.

The decision to sell means we can keep our management structure intact. I like the idea of being a part of the continued success of Intec Group and Fonebak.

Without the management and trained staff Intec would just be another repair centre he said.

We were determined to maintain our high service levels and find a safe harbour for all of our team. The ability to provide on- and off-shore services allows us that opportunity.

Intec and Fonebaks relationship began when Intec provided Fonebak with technical assistance and consultancy on testing and repairing handsets in Romania. A chance meeting in January led to discussions he said.

I have always got on well with (Fonebak CEO) Kathy Woodward and knew that she had an interest in adding a UK warranty repair business he said.

Over the past two years there have been several parties interested in acquiring Intec but this deal was for the right terms at the right time. This move gives Intec a competitive edge allowing us to offer our customers a more flexible solution.

He added: Offshore repair and refurbishment services will provide a low-cost alternative on non-time critical units and provides us with another option to offer our customers complementing our existing UK warranty repairs.

All calls were re-routed to 3s contact centre in Glasgow normally reserved for business customer enquiries.

Thirty-seven inches of rain fell in a single day July 26 in Mumbai killing nearly 900 people.

Staff at 3s Mumbai contact centre which also takes calls from Hutchison Whampoa customers in Australia were unable to get to work for a week.

UK customers were redirected to 3s Glasgow office and Hutchison Whampoa briefed Avarto its third-party logistical support agency to take calls though it was not needed.

A 3 spokesperson said: The conditions made travel in the city very difficult and many of our team in the contact centre were unable to get into the office. We mobilised additional support quickly to ensure our level of service was maintained at this difficult time and we could answer customer calls.

The call centre team in Glasgow were taking first-line enquiries and Avarto was briefed to provide additional back-up if required. Were pleased that our level of service was maintained for customers and Mumbai is now back online.

See Mystery Caller page 32

The CWU was still to engage in a final round of talks with O2 over its pay offer to CWU members. The decision on whether to serve notice of industrial action against the network depending on how the talks went this week will be announced today.

CWU lead negotiator Dave Johnson was not hopeful that both sides could reach an agreement.

O2 has attempted to resolve some of the problems but has not so far showed sufficient willing for us to change our position said Johnson. We dont want to go down the road of industrial action but we are not going to hold our breath.

CWU members rejected O2s pay offer by a margin of 24 to one last week. The CWU balloted 3700 members and recommended they reject O2s latest pay package which it claims would freeze the basic pay of half the workforce for seven years and link that of the other half to unattainable performance targets.

The CWU claimed a 76 per cent turnout with 96 per cent voting to reject the offer.

Which? said that one in seven mobile phones develops a fault within its first year on average following a poll of 2500 UK phone users. It found that 3 was the least reliable network with almost one third of its customers complaining of faults in the first 12 months.

Motorola marketing manager James King said:

Once a handset is in the market there are so many things that affect it from the kind of usage to which a device is submitted to the negative backlash of being associated with a network. One of the operators had more issues [than others]. Because we are one of the few suppliers to that operator we have got a bad rap. It isnt reflective of Motorola as a whole.

A 3 spokesperson said: Which? has taken a sample size that is not representative. It has spoken to 50 of our customers when we have a customer base of three million. The other thing is that you cant possibly compare text- and picture-messaging GSM phones with the new and complex technology available on 3G handsets.

Which? magazine principal researcher Pete Tynan said:

There is no way that we would recommend Motorola or Sony Ericsson handsets or the 3 network to any consumer. It is staggering. Around 600000 phones are going wrong every year and those customers dont receive the right help.

Tynan added: It is a statistically valid sample. Any number over 30 gives you a valid sample. And when almost a third have a problem then it sends out a very clear signal.

Other UK network operators dismissed the report.

A statement from Vodafone said: Over 90 per cent of the population in the UK now have some sort of mobile phone in a market which is extremely competitive between network operators and the mobile phone manufacturers.

At the end of the day a phone that doesnt work cannot make money for us so it is in our best interest to sell a fault-free handset. Whenever problems occur we seek to solve them for our customers as soon as possible.

An Orange statement said: We offer a 14-day no-quibble money-back policy. Additionally we offer a policy that in the event that a mobile phone is faulty an Orange customer can return the phone to the Orange shop they bought it from within 28 days to exchange it. These policies are in addition to customers statutory rights.

The network added: The recent Which? report fails to make the distinction between a network operator and a handset manufacturer and doesnt address whether when a customer has had a problem with their handset the problem was resolved by Orange.

Tynan responded: Customers get passed between the network the manufacturer and the insurance company. But it is up to the retailers – both the high street chains and the networks own stores – to sort this problem out. If they have problems with certain manufacturers they should stop selling them.