We are right in the middle of negotiations to get the company re-financed Dawe told Mobile News. We have recognised for some time that Unique Distribution is under-capitalised.

He added: Given the size and scope of the company without more capital we cant do what we need to do to ensure maximum growth. We need some exterior help in getting finance.

Industry sources cited Carphone Warehouse as making a bid. Others reckoned a consortium of Spanish businessmen headed by ex-European Telecom managing director John McFarnon was in the frame.

However Carphone Warehouse boss Charles Dunstone said his company was not involved. McFarnon also categorically denied he had anything to do with any Unique bid.

But Dawe did not rule out any potential buyers. The finance could be in the form of a venture capitalist trade buyer finance houses banks or a consortium coming in and joining the board he said.

We recognise we have to so something quickly because of the current market conditions. Rumours are flying around and we would like to quash them but all I can say right now is that we are very close to announcing something.

Some dealers saw an injection of capital into Unique as a logical step.

One said: If Unique wants to catch up with 20:20 Logistics it will need a financial leg-up. 20:20 is so far ahead of all the handset distributors because it has got the financial muscle of the Caudwell Group behind it.

A company like Unique with some extra financial weight behind it could be serious competition for 20:20. Dawe has the relationships in place he just needs more capital and I think what he is doing makes logical sense.

But one trader who dealt with Unique saw other reasons behind the move.

Unique Distribution was set up primarily as a trading company. But when the joint and several liability problem arose it had to remodel itself he said.

It did a few fulfilment programmes. But the company was giving too much of its profit away to its investors. It has some good contracts but there is no margin in them so it is hard to see what anyone will pay for them.

It works on less than a one per cent profit margin and theres no way you can run any business on a margin that small. Customs and Excise owes Unique 2.7 million but its unlikely to hand it back.

The subject line was O2 Gateway Contingency and was sent from zaheer.afzal@o2.com. It replicates until the recipients mailbox fills to capacity.

An O2 spokesman agreed the e-mail did not originate from an O2 e-mail address but had been spoofed by a third party. Spoofing is the act of forging the header information on an e-mail so that it appears to have originated from somewhere other than its true source.

This is not the first time the independent channel has been hit by the spam e-mails. In June 250 dealers and distributors received between 200 and 20000 junk e-mails that appeared to be from O2.

O2s fraud and security department advised victims that it was working to identify the originating ISP.

The network stressed it would not be offering any compensation to those affected. It sent an e-mail to dealers stating: Although we sympathise having suffered similar inconvenience we cannot admit liability as this is a malicious action that has been taken by a third party whose identify we are still investigating.

An O2 spokesman insisted the network was doing all it could to make sure this wouldnt happen again.

The move is a book-balancing response to the Competition Commissions edict that call termination charges must substantially reduce from July.

Orange is mounting its own campaign for a judicial review to challenge the legality of the order as are the other three networks.

Oranges revised subsidy policy comes a fortnight after Vodafone also said it would be cutting subsidies and dropping dealers unable to write profitable business (Mobile News February 10).

The reduction in call termination charges will create a significant revenue hole for this year and the future said Orange sales director Stuart Henry.

We have a number of alternatives for increasing revenue and decreasing costs. We need to remove the handset subsidy entirely. We have minimum costs to serve and we now believe there ought to be a minimum cost of ownership to he consumer. added Henry.

We realise there will be some nervousness about the significance of such a move. So our initial (Cont P2) move will be to remove a minimum of 40. But we need to remove more not later than the end of Q3. We would be looking to do something in August. Retailers and manufacturers may absorb some of the hit by reviewing some pricing but it will probably mean an increase in handset costs of 50 to 60 if not more. Distributors may pass on subsidies to the dealer but volumes will decline. Ultimately the whole business is going to shrink.

Henry echoed the remarks of Vodafone distribution boss Stephen Brewer by also describing the Competition Commission ruling as a major landmark in the UK mobile communications industry. (See Comment).

Vanguard CEO Nick Wiley admitted to Mobile News that the July payroll had not gone through because the company was moving to another bank reports Sherelle Folkes.

We are not in any financial trouble said Wiley.

I can give full assurances that we are not in or about to enter into liquidation. We have money. But it is stuck in the ether.

We cant get it into our staffs accounts until everything is sorted with our new bank. I am working on sorting it. Staff should be paid imminently.

But one of Vanguards employees revealed:

Everyone is worried. The money is almost a week late. No one has been able to give us a conclusive answer.

There are continuing rumours the company is in trouble. It has changed banks three times in the past 12 months.

Wiley insisted that staff had been informed of all developments concerning the change in banking:

We have spoken to staff to put their minds at rest. I cannot comment about other bank accounts because it was before my time he said.

Pay problems dont seem to be Vanguards only troubles.

Steven Ikin Vanguards fiinance director resigned last week to become financial director at mobile content provider Mobile Entertainment Group which is run by Tony McDonagh former group marketing manager at Vanguard.

In addition Harrogate installation company Co-Star Electronic Components has closed its account with Vanguard.

Wiley responded: Co-Star has changed its view in terms of the credit position we have with it. We are in dialogue about this at the moment.

Manchester call centre Quay Contacts was putting around 100 connections a day through Vanguard but ceased dealings with Vanguard last Monday and has now signed up with rival distributor Hugh Symons.

Vanguard has had a controversial couple of years. It received an 8million boost 20 months ago after selling 49 per cent of its business to a UK private investment group.

As part of the cash injection the company appointed a new chief executive Paolo Fidanza.

Fidanza had extensive experience in the automotive and telecommunications sectors and had worked with Lotus Cars in both Europe and the US.

He left after just a year after a re-financing deal fell through and has now returned to Italy where he has set up broadband venture Atitel (Mobile News July 26).

Comment boss Phil Gardiner made the disconnections over the past four months.

In East Anglia network coverage can be poor he said. Vodafone and Orange have always had the lions share of connections but 3s offering was so attractive that we had customers who wanted to connect. They knew 3 did not have 3G coverage in this area but that coverage defaulted to O2.

But Gardiner said customers found the network wasnt defaulting to O2 so were unable to use their phones for long periods.

Gardiner claimed the situation became so intolerable that customers wanted to scrap contracts. He says he was met with considerable resistance to this from 3.

3 didnt want to know at first. But then it admitted it didnt have the coverage and was prepared to release people from the contracts.

Gardiner believed that one of the possible reasons is that O2 customers take priority over 3 in the area. O2 denied this was the case however.

The agreement allows 3 customers to make calls using O2 where 3G service is not available. There is no service priority to O2 customers over 3 customers said a spokesman.

The arrangement with 3 does not provide automatic handover to the O2 network. If a call starts on 3 but coverage becomes insufficient to complete the call it will not automatically hand over to O2. The call would drop and the customer would need to redial. (cont P2)

Gardiner has transferred the customers on to new contracts with Vodafone and Orange.

A 3 spokesperson said:

In certain circumstances where a customer is experiencing problems with video calling 3 would work with the customer to resolve the issue.

3 has also upset dealers with the unreliability of its registration and payments systems.

Ellis Dunning founder of Talksense in Borehamwood said 3s automatic registration system crashed three months ago and the network was registering connections manually. The knock-on effect is causing problems.

3 said it would register one of our customers and tell her the transaction number said Dunning.

The customer decided not to take the contract because 3 took so long getting back to us. We assumed that the phone was not connected. But last month the customer found she had been charged three months rental on a phone she never used. Its not our fault and its not hers.

We cant really have a go at 3 either because it paid us commission. But we could have done without the bother of the transaction even with the commission.

If we he had been informed by 3 within the 14-day cancellation period we would have been able to prevent the problem.

We have to pay the customers contract cancellation fee and will still be out of pocket despite the commission payment.

At the time of going to press 3 was unavailable for comment on the issue.

3 has been luring new customers with half-price line rental on all pay-monthly tariffs for the first three months of contract whether acquired directly or indirectly. These discounts are now open to upgrade customers reports Sherelle Folkes.

Our half-price line-rental offer has proved popular with new customers said a 3 spokesperson. So were extending this to customers who are upgrading on a new contract. They are as important to us as new subscribers.

Andrew Culverhouse director of Barnet-based Time2Talk said the initiative was a great step forward.

We have been saying for ages that the networks need to change their mindset. They have to even up the balance between what they do to get a new customer and the little they do to keep their old ones.

Historically the networks have never offered upgrade customers the same deals as new connections.

Culverhouse doubted that other networks would follow 3s lead however.

How much of 3s trends have the other networks replicated? They have not offered anything like Video Talk 500 or Talk 750 despite the fact that those tariffs have won 3 loads of customers. It seems that they have just been sitting back and letting 3 get on with it.

Paul Leonard managing director of Essex-based dealership Sprint Communications also gave 3s upgrade offering the thumbs up.

Customers are always aggrieved that they pay their bills to the network for 12 months only to see the better deals going to new customers. It just encourages them to churn to another network he said.

Leonard went on: The dealer channel has always said that the networks needed to change their attitudes. Its great that 3 realises you have to look after the old as well as the new. 3 will get great results from this. It may even recover some of the customers it has lost.

The pay crisis had fuelled speculation that the company was in danger of folding (Mobile News August 9).

Vanguard CEO Nick Wiley said:

Staff were all paid in full last Monday. The banking situation is now resolved. Dealers were due to be paid on Friday (August 20).

It now has 3.2 million customers worldwide.

Globally Hutchison Whampoa put on 2.5 million new customers over the past six months with 697701 in July averaging 22500 per day based on a seven-day week.

(See next issue for full story and analysis).

MYMO (My Mobile) is a three-button cat-shaped mobile phone aimed at five to 10 year-olds. It can dial five pre-programmed phone numbers and is available online for 69. It is billed as a security mobile that buys parents peace of mind.

Communic8 is trying to get the handset supported and branded by O2 the network that has expressed the most interest in the product.

A spokesman for O2 said: We dont market to children in accordance with the Stewart Report. If its marketed to parents as a phone for children that is different.

But John Carr Internet consultant for the national childrens charity NCH and a spokesman for the Childrens Charities Coalition for Internet Safety (CHIS) said:

MYMO certainly has to be careful in terms of marketing (cont P2) and advertising. Everybody will be watching where it advertises. We dont want to see it in any magazines comics on MTV or around Disney productions and things like that. It cannot exploit any child-parent pester power.

A spokesman for MYMO said: Its being marketed to parents and guardians as a security product. We are aiming coverage at parents. We realise we cannot direct our marketing at children.

Communic8 has had to drop a tracking service from its product at the point of sale because government guidelines say it should be sold as an opt-in service only.

MYMO is currently looking for distribution partners.