CellStars US parent company last week decided to shut its UK Argentina and Peru distribution businesses due to heavy losses.

The UK division went into the red due to falling margins and bad debts totalling hundreds of thousands of pounds from defunct companies such as Odyssey and The WAP Store.

CellStar chief financial officer Robert Kaiser said:

We have been disappointed with our performance in the UK. Improving our position in the UK would require substantial investment which we are not willing to make in that market.

CellStar will now focus on Asia Mexico and the US which it hopes will perform significantly better than the UK.

A CellStar US spokesperson told Mobile News:

It has been extremely difficult for a US company to be (Cont P2) competitive in the UK and develop key relationships. We have tried but we have not been able to compete with the local UK-based distribution companies successfully.

There is a valid argument that we should have closed down the UK business earlier. Now that mobile phone penetration is high among consumers and there are fewer new subscribers there is not enough business to go around. We were not profitable in the UK. We were number five or six. We needed to be number one or two to be successful.

Unique Distribution joint managing directors Rob Lees and Angus Dawe said:

It wasnt a surprise. With the maturing of any market you are always going to get consolidation. CellStar will not be the last distributor to go this way. What I say to dealers is that when this happens the companies that remain in the industry become stronger. How many others will go is something we cant predict. There will be more.

Companies like CellStar and European Telecom probably had too much money invested in them to provide suitable returns in a developed market. One thing people can learn from this is that box-shifting isnt going to be enough to keep distributors afloat. Distributors have to add value for the dealers.

Lees added that there are still opportunities in distribution.

Overall prospects are good. There are 40 million handsets out there that are going to be replaced over the next two years. More will be required as new technologies are rolled out. The sort of thing that has happened with CellStar was inevitable given an exploding marketplace.

With CellStar being part of a multinational the UK operations were always going to be judged against other markets that werent experiencing the sort of slowdown that we are experiencing in the UK.

Fone Logistics managing director Ian Gillespie said:

It is disappointing to see another distributor going this way. It is something that has been on the cards for a while. Everyone knew that the market was suffering and that there were going to be these sorts of developments.

It is good news for the surviving distributors but I am sure everyone feels sorry for the people who will be losing their jobs.

Avenir Telecom UK managing director Geoff Walters echoed the thoughts of his counterparts saying:

It will be survival of the fittest. Networks do not want box shifters. They want to deal with companies offering a total solution. CellStar was hit for huge amounts of money when people like Odyssey went down. It seems it has been struggling since then. There will be one or two more that go. A change had been on the cards ever since it announced that it was undergoing a review of all its businesses. It is a very unfortunate situation.

One individual close to CellStar who declined to be named revealed how the company slid from profitability into decline:

The problem for CellStar being based in the US is that the Nasdaq stock market concentrates on the return on capital employed not just profits. The shareholders demand a 20 per cent return on capital employed thresholds. For every 1 million invested the shareholders expected at least a 200000 profit per year. Until the end of last year the company performed above that level. Maintaining those figures was getting harder.

CellStar had to write off large amounts of bad debt when a number of its customers went into liquidation. The company also suffered because of theft and lorry hijackings. This sends overheads up because insurers hike up premiums.

Distributors including CellStar have also been hit by fraud a lot of which goes unreported. In the end the board in the US decided to step in. It will probably invest in areas such as Asia where the shareholders will get a better return on their investment.

The 500000 claw-back row between Orange

Rocom disputes Oranges claim of around 500000 in claw-back over irregular connections made by Rocom dealers.

Rocom says Orange employees OKd the deals. But Orange maintains that the ultimate responsibility for the connections is down to Rocom.

Rocom chairman Bob Old says he is not aware of any legal action by Orange.

We are yet to be advised of Oranges intentions. The amount owed is much less than the figure being bandied around and is reducing by the day. We owe Orange money. But that is offset by ongoing connections and the commission owed to us. Its simply a case of agreeing a final figure.

The amount is becoming so insignificant I cant see that it would be worth Orange going (Cont P2) legal. It might not even be worth resisting. Well have to wait and see concluded Old.

Meanwhile Orange has put Rocoms account on hold though Rocom still has Orange stock it is connecting.

Rocom is not ordering any Orange kit and has not done so for some time. Any company that finds itself in a debt position with Orange has its account on stop. That has been the position with Rocom since last October said Orange head of sales Stuart Henry.

See interview P32.

T-Mobile dealers who previously had One 2 One shop frontage signs have been told they cannot have an equivalent solus T-Mobile sign. Instead they must offer other networks to customers.

T-Mobile is more or less telling us that it is going to open up its own shops and that it doesnt want to be associated directly with (Cont P8) dealers said George Christos director of London-based dealer Tagrose.

T-Mobile told us to get rid of its branding. All we can have over the shop is our name. We cant say we are a T-Mobile specialist or anything like that. We were shown artwork of a company sign that had nothing apart from our company name on it.

When we asked about the fact that we are service centres as well we were told there were to be no exceptions.

It makes no sense to remove the branding. The company is passing up a massive opportunity all across the country. All I can presume is that now it has its own stores T-Mobile wants to differentiate completely from anything else in town. One of my shops is at the end of Vauxhall Bridge in London.

The One 2 One signage that has been there must have given the company tens of thousands of pounds of free advertising a year.

We are opening more stores anyway so we look at it this way.

T-Mobile has made its choice; well do all the networks at any new stores we open.

Philip Edwards manager of Airphone Communications Doncaster store says:

The rebranding is ongoing.

T-Mobile has changed all our point of sale inside the shop. Weve been told well have to get rid of any external branding.

At the moment we dont know what to do with the signage above the door. As far as I know all we can have is Airphone Communications Ltd.

The downside is without the network branding people wont really know what we sell. It could damage our business. Well have to wait and see.

The only reason I can think for them making us get rid of the external branding is to stop people coming to us for upgrades.

If customers see us with T-Mobile above the door of course theyre going to come in and sort out their upgrade with us.

Another dealer who asked for his his name to be withheld for fear of retribution from T-Mobile told Mobile News:

What T-Mobile is up to scares me. It set up a T-Mobile dealer conference on the premise that it had a lot of exciting news for us. The only news it had is that it wants us to take its signs down.

The only way we are allowed to have a small T-Mobile logo on the shop front is if we offer at least one other network in addition to

T-Mobile.

What is the logic? Where I am in London. I dont want to do another network I dont need to do another network.

Yet if T-Mobile is the only thing you sell the only branding you can have is a small sticky-out sign. To qualify for T-Mobile branding I must use another network to demonstrate some independence.

T-Mobile is actively working to lose its presence on the High Street. Its losing its presence at the cutting edge where people make their buying decisions.

If its does drop the independent channel theres no way it can open up another 200 or 300 shops immediately to run alongside the remaining Pocket Phone Shops. Its sales will drop.

It wont have the presence. It wont be able to get back onto the High Street in the short to medium term.

And all at a time when Hutchison 3G is presumably eyeing up independent dealers. When it gets to the point that a dealer cant voice his fears in public because he is genuinely frightened of persecution that shows how bad the situation has become.

T-Mobile denied that there had been any such ban on signage and said it would be delighted to have its branding on the front of stores – provided they are owned by authorised dealers.

Patrick Barrow head of external communications said: No authorised dealer is being denied branding. There is some delay with some of our branding but as far as a ban on stores is concerned this is not something we are aware of.

As long as a store is an authorised dealer there shouldnt be a problem. We would love everyone to know that these stores are

T-Mobile stockists.

The licence cost f114.1 million payable over 15 years. The first instalment has to be paid in advance. O2 already has 3G licences in the UK Germany and Netherlands.

Retailers are missing out on the profit potential of selling downloadable content such as ringtones and logos says a new Mintel report commissioned by mobile content provider M4 on the usage patterns of mobile phone users.

The report says demand for downloadable content including ringtones logos screensavers and games will increase tenfold by 2004 and will be potentially worth 1.5 billion. Of 2000 people interviewed 80 per preferred to buy downloadable content from retailers rather than from the internet or off-the-page dealers.

M4 managing director Steve Hughes says the report highlights the revenue potential in selling downloadable services.

Retailers have been slow to take up downloadable content because they have been unsure about the revenue potential. Few content providers have put together a package that appeals to retailers and offers them a retail margin.

Operators encourage retailers to sell services. But they do not give the retailer anything in return.

The report comes as accessory distributor Dextra launches its new range of downloadable content services which are claimed to allow dealers a 30 per cent margin from 5.99 packs.

Dextra says its aim is to make retailable mobile content packs more available in distribution routes and for high street retailers.

The new packs cover musical artists Eminem and Destinys Child and offer five pieces of content from a choice of ringtones icons and colour backgrounds for the Ericsson T68.

Future releases of artist packs include Blue Atomic Kitten and Oasis.

Sales of Bluetooth products have really taken off and sales of the T68 have been very high. The problem we have is that the forecasting hasnt been accurate.

As a result the demand has been greater than we expected. Its not like turning a tap on.

To ramp up plastics components and production takes three to four months. We are working to resolve the situation. A new headset is due to be launched at the end of the month.

We are not unduly concerned. It is just a short-term issue. The problem has been exaggerated because handset sales have been successful said Marsden.

The biggest problem is that we cant build the handsets quick enough. We have ramped up production of the T68i.

Were taking this problem seriously. Some accessories cost as much as entry-level handsets. Perhaps few imagined that people would be prepared to pay as much as 120 for a headset but they are. We are resolving the situation but our customers need to help us by giving us better forecasts and making commitments to stock.

We are not going to produce products without those commitments. If customers fail to give manufacturers the right forecasts then the manufacturer will fail every time.

Dealers are unhappy that Orange stores and Orange customer services seem to offer handsets to customers at the same price for upgrades as new connections.

Oranges commission structure for the independent dealers means dealers have to charge more for a handset upgrade.. Dealers say this is causing customers to buy direct from Orange

Jeff Butterworth of Bolton based JB Communications has asked his distributor Mainline to convene a meeting with Orange.

I am losing five customers per day on average because Oranges own shops can afford to offer customers cheaper upgrades. They offer a Nokia 7210 on upgrade for 100 some 70 cheaper than us independents. If we were to offer the same deal we would lose 30 on every deal. We cant sustain a business on that.

Mainline that it is trying to organise a meeting with Orange to resolve a number of issues. I have been a solus Orange dealer for more than seven years. I am losing g customers because they dont understand why Orange shops can offer upgrades 70 cheaper than us (cont P2)..

She was formally charged last month said Hatfield police.

An earlier hearing on November 26 was adjourned to allow Westbrook (39) of Welwyn Garden City to employ a solicitor. She was remanded on conditional bail.

X Art went bust last month because of the alleged 60000 embezzlement and a 50000 debt by the Pau bothers failed accessory company Blue-I said the creditors report.

Westbrook was employed as a bookkeeper from November 2001 to July 2002.

X Art discovered financial irregularities a day after she left the company. A cheque issued to the Inland Revenue for 20000 was not able to be paid as there were insufficient funds in the companys bank account. Neither X Art director recalled signing or authorising the cheque.

X Art directors are in dispute with the bank for allowing doctored cheques and cheques with false signatures to have been paid.

Australian-born Mia Nickoli Tripodi 21 had been charged with stealing 1934 from Oranges Oxford Street store in June.

But district judge Rosamond Keating discharged her after refusing the Crown further time to prepare its case.

Phones4U threatened legal action after an online affiliate of (Cont P2) The Carphone Warehouse secured the domain address phones4you.co.uk.

Phones4U managing director Anthony Catterson demanded a public apology and financial compensation from his high street rival. But The Carphone Warehouse says it had received no correspondence from Phones 4U.

The Carphone Warehouses website was the eighth most visited site in November according to internet search engine Google along with sites connected with with Ulrika Jonsson John Leslie Pamela Anderson and Britney Spears. The Carphone Warehouse website is the only mobile phone company site listed in the top 10.

This year growth has been 147 per cent. We are getting more than 500000 unique visitors per week. Half of Carphone Warehouse customers are researching on carphonewarehouse.com before going in-store said director of online business Chris Murton.

Geremy Thomas denies the allegations.

In an announcement to the stock market last week PNC said Thomas who is trying to regain control of PNC (Mobile News November 25) could be in breach of regulations.

The directors also accused him of trying to seize control of the company without making a formal offer to shareholders.

PNC directors wrote to the Financial Services Authority (FSA) and the Department of Trade and Industry (DTI) requesting them to investigate Thomas share dealings.

PNC directors questioned his purchase of shares despite two profit warnings. PNC alleges Thomas bought the shares in advance of interim results. They suspect he received sensitive information from his younger brother Crispin who was PNCs director of marketing until last month.

The DTI would not confirm or deny that it had received a complaint from PNC. The FSA said it was looking at the points raised by PNC.

These are simply allegations of insider dealing. We will have to make some preliminary enquiries before we decide to investigate said an FSA spokesperson.

Geremy Thomas told Mobile News: PNC ensured Crispin had no access to any financial information to protect him. It is just a feeble tactic by them to destroy my reputation he said.

The battle for control of PNC also took a new twist when PNC blocked Thomas request for an EGM on the grounds that his notice of EGM was not properly served because it was faxed rather than mailed.

PNC directors want Thomas to reveal the identity of his backers.

They are worried one of his supporters may be former chief executive Darren Ridge who is a 6.5 per cent shareholder.

PNC is litigating against Ridge over the alleged misuse of company funds. It says its case would be undermined if Ridge was involved with Thomas bid to take control of the company.