The research houses regular TelecomTrak survey found that network stores such as Vodafone Orange O2 and T-Mobile have risen to a 37.3 per cent share of the contract market. Mobile specialist stores such as The Link and The Carphone Warehouse has fallen over the past 12 months from 41.1 per cent 37 per cent.

TNS TelecomTrak director Paul Moore said: In a nearly saturated market it is essential for networks to retain customers especially high spenders who will take advantage of the latest download MMS and 3G service offerings. Customers who shop via network stores spend more on their mobile phones.

The network is piloting the QuickPhone kiosk the first vending machine in the UK to dispense mobile phones at its two Manchester retail stores.

The machine is designed for those who know what they want from a simple Pay As You Talk phone from 30 to a SIM pack costing 5. It will offer a choice of three phones.

It is the first vending machine to use chip and pin technology in addition to allowing customers to pay in cash. Phones will change monthly.

Emblaze CEO Laurence Alexander said that the Sting 6 clamshell phone which will be exclusive to Virgin Mobile is the first of several exclusive co-branding deals with UK network operators.

We have been working with several operators on phones for different segments of the market said Alexander. We will announce them in due course.

An Emblaze spokesperson added: A lot of devices are going through the approval process with UK network operators but the Sting 6 will probably be the only Emblaze device that reaches the UK market in time for Christmas.

Alexander said that the number of staff at its London offices had risen to 20 in recent weeks and that its global headcount which includes staff at a new R&D plant in Korea had reached 400.

We have taken a lot more sales and marketing staff at our offices in London. We have recruited from Orange and O2 as well as from companies within the fashion industry he said.

The Sting 6 features a 1.3 megapixel camera and will be priced at less than 80. Alexander said it was targeted at 16- to 24-year-olds the same demographic that Virgin Mobile appeals to.

It is a high-end cameraphone that is affordable to 16- to 24-year-olds. Virgin Mobile is a great brand and this device hits its sweet spot perfectly said Alexander.

The Sting 6 will be sold exclusively through Virgin Mobiles direct retail channels and Dixons Stores.

Virgin Mobile sales and marketing director Graeme Hutchinson said: Emblazes attitude and outlook is akin to our own.

Emblaze Mobile CEO Laurence Alexander said: We have held discussions with European Telecom about helping us in the distribution channel into continental Europe. We are in talks with other distributors in other markets as well. We already have a distribution deal for the UK with 20:20 Logistics and that is exclusive.

European Telecom managing director John Drinkwater said: The conversation we have had with Emblaze is about supporting it on the continent. I cant say more than that because the deal hasnt been finalised.

Both Alexander and Drinkwater denied reports last week that Emblaze was about to acquire European Telecom.

I am deeply upset and frustrated at these reports said Alexander. 20: 20 has an exclusive deal with distribution to the UK market. We will always consider merger and acquisition activity but talks with European Telecom have had nothing to do with any acquisition.

Drinkwater said: People have put two and two together and made five. Of course the members of our board are businessmen and would consider offers if they valued the business at the right price. If someone valued the business at 200 million then the offer would have to be looked at.

It is inevitable considering the climate he said. People would prefer to take a fully subsidised handset on a monthly subscription than pay 60 or 70 up front for a pre-pay handset. Logically the macro-economic impact on pre-pay is greater than it is on contract.

Taylor said that pre-pay had boomed in Q2 last year after 3 launched its pre-pay proposition so it was inevitable that there would be a slowdown this year. But he added that the pre-pay results were very acceptable and that the chain had done pretty well in a difficult retail environment.

Taylor said that the same retail slowdown had affected SIM-free sales down two per cent to 0.18 million for the quarter.

The contract market retained its buoyancy in the quarter said Taylor because consumers were happy to commit to contracts. Handset design and supply were also good.

Carphone Warehouse subscription connections grew 20.6 per cent to 0.83 million. Connections overall rose 15.1 per cent to 1.78 million.

Why pay 129 for a handset when you can get it for free on contract with a good tariff? he said. 10 per month in the future seems better than forking out up front. l The Carphone Warehouse has ordered the entire European stock of several hundred thousand of the latest pink Motorola V3 RAZR to cater to the female market in the run-up to Christmas according to CEO Charles Dunstone.

See Business Watch page 16

The 12-month sponsorship deal is Oranges biggest ever radio sponsorship deal and Virgin Radios biggest ever radio and web brand marketing deal.

Orange director of brand marketing Pippa Dunn said: It gives us the perfect way to try out new ways of talking to and getting feedback from our customers.

The Orange brand will feature in Virgin Radio content both broadcast and streamed via the Internet as well as on the breakfast show pages on its web site.

Orange will also be included in the stations weekly newsletter and a Christian OConnell site will be created on Orange World to give subscribers access to audio clips competitions and news from the show.

Virgin Radio sales director Nick Hewat said: The breakfast show is any radio stations premiere sponsorship opportunity.

OConnell replaces longstanding breakfast show DJs Pete Mitchell and Geoff Lloyd.

A Virgin spokeswoman said that the ad will depict Moss poking fun at her public image following the loss of several lucrative advertising contracts after drug abuse allegations.

The commercial which is being produced by agency Rainey Kelly Campbell Roalfe will follow a similar format to other Virgin ads featuring high-profile stars such as Wyclef Jean and Missy Elliott.

It will show Moss in a rare speaking role and will also mark the television premiere of the Motorola RAZR V3i phone which will be available from Virgin Mobile in late December.

Virgin Mobile brand director James Kydd said: Kate Moss is an icon. We are thrilled that she has agreed to appear in our latest commercial. In return the least we can do is make it really funny.

The ad will first be seen online from December 20 with a TV campaign airing from December 24 and continuing throughout the festive season.

Staellium UK CEO Carole Barnum said: The ability to send a self-destruct message has massive benefits for people from all walks of life from everyday mobile users through to celebrities and business people but this is just the start. Next year we will launch new services such as self-destruct e-mail voice and picture messages.

The service is available to WAP-enabled handsets with a UK SIM card. Customers sign up to the service by texting STEALTH to 80880. They then receive a link to download the StealthText applet via a WAP connection.

To unsubscribe users text STOP to the same short code.

To comply with legal requirements a log of the deleted SMS messages remains on a secure server for a period of time before being completely deleted.

Staellium claims to have already received enquiries about the service from financial services companies the Ministry of Defence and celebrity agents.

While Sandford was unavailable for comment as we went to press Yes managing director Keith Curran confirmed that Sandford was to leave and that his departure from the company will see marketing director Simon Howitt become sales and marketing director.

Matt Sandford will be stepping away from his role as sales director to pursue other business interests nearer his home which is in Shrewsbury and to spend more time with his family said Curran.

Wed like to thank Matt for his efforts in contributing to our performance during the past two years.

Simon Howitt will combine his role as marketing director with the sales function to take the title of sales and marketing director.

Simon has been responsible for Yes Telecoms marketing since our start and has played an active role on our board this year advising on key strategic issues added Curran.

Meanwhile Yes has launched a retention strategy aimed at reducing churn which has seen it raise commissions so they are comparable with what a dealer would get if they were signing a new connection.

The initiative is being led by commercial director Ed Hyde who assumed responsibility for retentions on October 1. Hyde recently went on a retention roadshow to gather feedback from a large number of Yes business partners.

There were a number of key messages relayed back which we have built in to current and future activity said Hyde. It was very clear that our business partners want a simple re-sign process that rewards them for re-signing existing business.

Historically the process has been convoluted and in many cases the commissions have been uncompetitive. Yes Telecom has always been about attracting and retaining high quality customers and this new retention scheme does exactly that.

Each customer is given a re-sign band reflecting how much they are valued by Yes and thus how much commission the service provider can afford to invest in each connection.

Our standard re-sign commissions go right up to 460 for a one-year contract and 700 for a two-year contract noted Hyde.

Hyde confirmed that Yes will also be introducing a re-sign volume bonus for each of its business partners. This is designed to generate increased volumes of re-signs and give an additional fund to allow them to cater for more expensive re-signs he said. The bonus will be payable on all re-signs excluding discounted tariffs or data connections.

Yess retention re-focus has also seen the appointment of Lynn Greener as retentions manager. Greener who previously worked for British Gas Communications and OneTel will be responsible for re-sign and retention activity for Yes.

The Virgin Group rejected NTLs offer of 323p a share on December 7 on the grounds that it did not represent the true value of the company.

However Sir Richard Branson who owns 72 per cent of Virgin Mobile has indicated he is willing to lower the price for his stock.

So far there has been no indication that either party is following up on the offer.

See Business Watch page 16