A row has broken out between South Wales-based dealership EHD Telecom and Burton-on-Trent Orange distributor Mainline over 20000 in unpaid commissions.

EHD claims Mainline is refusing to pay them commissions due for connecting customers to Orange.

However Mainline says it is not happy with the quality of EHDs connected customers and wants to see copies of customers proof of address and IDs before it will release the money. Mainline has also terminated EHDs dealer agreement.

Mainline managing director Andrew Boden told Mobile News:

Mainline has chosen not to continue to do business with EHD telecom on the basis of subscriber quality.

We will pay the balance of any money owed once all unpaid stock is returned and we have received copies of customer proof of ID and address as stated in our trading terms.

We have received a statutory demand from EHD. These have been passed to our solicitors. Unless we see the documents requested we will hold commissions until the (Cont P2) claw-back period of six months has expired. We have tried to be reasonable. We have offered to pay EHD for the time and cost to produce copies of the documents we require. But it has fallen on deaf ears said Boden.

EHD managing director Eileen Davis claims Boden either does not want to pay or is unable to. She told Mobile News:

We have served Mainline with documents relating to the insolvency act for non-payment of around 7000. The total figure owed to us by Mainline is between 20000 to 25000.

We will issue documents over the remaining amount. Andrew Boden has not been able to agree payment terms with me. I dont know if he cant pay or wont pay.

There is an open door for Mainline to settle up. It is now down to the courts to decide payment terms.

Mainline only terminated our trading agreement after receiving the demands. We have nothing to hide. Our documentation is open for Mainline to see.

Joint administrative receiver Neil Geddes of Manchester-based accountancy firm Levy Gee said:

It is unlikely that the company will be resurrected in its current form. I could not rule out some of the staff being offered alternative posts elsewhere but again I believe that is unlikely.

We have received financial offers for certain parts of the business. I hope to be in the position to accept offers for those areas of the business we are looking to sell within the next few days.

Geddes said that it was too early to say whether the executive directors of The Phone People would face statutory investigation over the millions of pounds of losses.

No significant impropriety on the part of the executive directors has been brought to my notice as yet. The industry is undergoing significant structural change (Cont P2) and it appears that the company failed to deal quickly enough with the operational issues inherited from its predecessor.

It is disappointing that it has been necessary to discontinue trading operations. But there still remains the prospect that certain aspects of the business can be sold and we are looking for early expressions of interest.

Geddes is seeking offers for The Phone Peoples retail sites intellectual property and phone replacement business (see P14-P16).

Generation Telecom is tipped to be close to acquiring a Vodafone service provider for its subscriber base. Genesis Telecom and Global Crossing have been named by industry sources as the targets.

Nash will report to his old chief at Ericsson Generation Telecom managing director Keith Westcott. Nashs role will be to establish a new sales and marketing team and bring on new subscribers. (Cont P2)

Westcott told Mobile News:

I have worked with Barry Nash over the last eight years. I became aware that he was being made redundant at Ericsson and was keen to secure him to Generation Telecoms management team (full story next issue).

The company connected mainly One 2 One handsets and airtime through stores in Clapham Tooting Streatham Camberwell and Maidstone. It went into liquidation on December 21 last year. North London-based insolvency specialist R. Valentine & Co is the appointed liquidator.

NatWest Bank and (Cont P2)

One 2 One are understood to be the main creditors. It appears falling sales and squeezed margins forced the company out of business. In the year ending December 1999 turnover fell from 6.5 million to 2.5 million while profits fell from 36800 to 9062. These figures fell further as sales within the industry slowed throughout 2001.

In July 2000 the company changed its retail trading name from World of Accessories to Mobile Phone House saying the brand was confusing to customers. It retained the World of Accessories name for its own branded accessories.

This follows the suspension of a national sales manager and a dealer manager late last year (Mobile News November 12).

A third employee is being investigated in relation to the misappropriation of the companys funds said an Orange spokesperson.

Orange takes these allegations very seriously and is conducting a full investigation.

It is believed the national sales manager and dealer managers were involved in authorising irregular connections and marketing funds to two Rocom dealers that have since gone in to liquidation (Mobile News November 26).

Rocom is still disputing a 1 million clawback claim from Orange over the irregular connections made through Newcastle-based ITS and Wales-based Select Communications because it alleges certain Orange employees authorised the connections.

At the time Rocom chairman Bob Old officially declined to implicate the suspended individuals.

South London-based One 2 One dealer Mobile Phone House formerly known as World of Accessories and Fastgold Digital Telecom has folded with the closure of all its stores.

The company connected mainly One 2 One handsets and airtime through stores in Clapham Tooting Streatham Camberwell and Maidstone. It went into liquidation on December 21 last year. North London-based insolvency specialist R. Valentine & Co is the appointed liquidator.

NatWest Bank and One 2 One are understood to be the main creditors. It appears falling sales and squeezed margins forced the company out of business. In the year ending December 1999 turnover fell from 6.5 million to 2.5 million while profits fell from 36800 to 9062. These figures fell further as sales within the industry slowed throughout 2001.

In July 2000 the company changed its retail trading name from World of Accessories to Mobile Phone House saying the brand was confusing to customers. It retained the World of Accessories name for its own branded accessories.

A company with a Euro-centric name doesnt appear to be focused on the UK said Euro Cellular chairman and chief executive Win Donaldson.

Thats why Euro Cellular decided to start afresh in the UK with a new company. We sell more internationally than in the UK.

In the UK we have been selling well through non-traditional channels. We were never that desperate to move huge volumes in the UK if that meant offering people silly credit terms.

We didnt want to buy that sort of business. Now the market has changed and we see an opportunity. The company is looking ahead at 3G and we are looking at the level of service we need to offer in readiness for it.

M-Fusion sales director Chris Savva promised next-day deliveries a freephone number and a turnaround time for enquiries of 30 minutes.

Dealers have also accused BTCellnets Northern Ireland distributor Dialogic of poaching customers and bouncing commission cheques to dealers.

Northern Ireland-based dealership Advance Business Mobile told Mobile News that dealers who purchased from UK mainland distributors rather than Oranges appointed N. Ireland distributor Netcom were being denied training and support.

Advance MD John Williams said: Orange is pressurising UK-based distributors to stop supplying connections to dealers in Northern Ireland.

Williams says he prefers to deal with mainland distributors because they offer a better service than Netcom.

We do not trust the local distributors because back orders arrive on the last day of the month. We have been trading with MoCo Cell-Link. We are happy with them and we dont want to be told by Orange who we can buy from said Williams.

All Orange would say was:

Northern Ireland is well served by the existing distributor (Cont P2) relationship. If any dealers are concerned about the service they are receiving we urge them to contact Orange directly so we can address any issues they may have.

However Kent-based MoCo Cell-Link managing director Ian Robinson revealed that Orange did intend to prevent UK distributors supplying dealers in Northern Ireland and had only recently agreed to let MoCo Cell-Link supply an agreed list of dealers.

Orange did intend to stop supplies to Northern Ireland through us. In October/November Orange carried out a survey of opinion and indicated it was going to stop us supplying Northern Ireland dealers. We were concerned that Orange was trying to push us out of a market that has been good business for us over the last few years.

Then in December Orange had a change of heart. But we have been told we cannot recruit any new dealers in the province because Netcom is the preferred agent said Robinson.

BTCellnets Northern Ireland distributor Dialogic been criticised by Northern Ireland dealer HH Communication.

HH boss proprietor Bryan Hamilton accuses Dialogic of poaching customers.

Its not a good sign. Other dealers have experienced the same problem. We dont trust Dialogic. It has its own shops and has been sending out mailshots offering our customers upgrades.

We prefer to deal with mainland distributors. Its harder for them to steal our customers. Especially when they dont have their own shops. We get a better deal on the mainland because the bigger distributors are pushing large volumes through.

But BTCellnet is pushing us to use Dialogic rather than someone in the UK said Hamilton.

Dialogic dealer manager John McGuigan refuted the HH complaint:

It is not true that Northern Ireland dealers have to trade only with us. There has been a misunderstanding.

We have told dealers we are the only BTCellnet-appointed dealer in Northern Ireland. This has given dealers the wrong impression that they have to deal with us. In fact they can deal with any distributor and we are allowed to trade with any dealer on the mainland.

McGuigan denied that Dialogic was in any financial trouble or that it poached other dealers customers.

A BTCellnet spokesperson confirmed:

Dialogic is our appointed direct distributor in Northern Ireland. There was a huge selection process before we chose them.

They manage our dealers efficiently and effectively. We have not heard of any problems before now. If any dealer has a problem they should approach us directly.

We encourage our dealers to use Dialogic. We are not trying to cheat dealers. Dialogic are the best people to be used because they can supply stock much quicker.

We invite some dealers to trade with us directly provide they have been trading for over two years and meet the minimum level of connections.

Highlight of the new handset range is the new Fisio 820. This is is a high-end colour screen phone with built-in email Bluetooth and GPRS.

It is Philips smallest and lightest phone on the market weighing 85 grams and measuring 77cc.

Philips new mid-range handset is called the Fisio 620. The 820 is a GPRS phone that (Cont P2) features customisable covers screensavers downloadable ring-tones and game downloads.

A low-end phone called Fisio 121 will also be launched. This has 15 days standby time a high-resolution display and customisable fronts. The phone will most likely appear in operator pre-pay packs.

The new handset range is due to be launched at the GSM World Congress in Cannes later this month.

Philips UK managing director George McPherson told Mobile News the company was ready to relaunch itself following the sale of its manufacturing facilities to China Electronics and its Le Mans-based configuration facility to European Telecom.

We have stripped out a number of fixed overheads that will enable us to be extremely competitive said McPherson.

Selling the configuration facility to European Telecom was a good move for us. They will take the transceivers directly from the factory in China and add the keypad front and back covers and then load software for operators requirements. They pack the phone into operators boxes where required along with the right manuals and chargers.

It is more cost effective for them to do it because they can offer the same facility to other manufacturers. It is not our core competence. Our strengths are in sales marketing and defining the right products for the market.

We can now concentrate on specifying and designing wireless devices for our customers and selling them into the market.

McPherson says Philips will increase its distribution of handsets by selling phones alongside its other consumer products.

As handset subsidies decrease I expect to see our handsets on sale alongside our other consumer products in the likes of Dixons and our other retail partners said McPherson.

The debt includes a 1.4 million inter-company loan. Administrator Begbies Traynor is attempting to reduce Celltalks 300000 monthly overheads to around 120000 and keep it trading under the Clubmobile name while a company voluntary arrangement has been proposed to creditors.

Celltalk was once Oranges largest direct dealer connecting 10 per cent of all contract handsets. The company turned over 24 million in 2000 and employed over 200 people.

It made a trading profit of 1.1 million in the first half of last year. Newly-appointed finance director Christopher Gee has left after just three weeks in the job.

In May 2000 Celltalk became an AIM-listed company. Its shares have been suspended during the administration period.

From March to October last year Celltalk had a 1 million loan facility from Orange. In return Orange had a seat on the Celltalk board which ended when the loan was repaid last October.

Orange said the 1 million facility was not used in its entirety and that the companys troubles were unrelated to events last year.

Celltalk joint founder and managing director Jess Meridith-Watts told Mobile News. (Cont P2) We will trade through this situation. The industry is in a period of change brought on by market saturation. But we are operating in an upgrade market and have been for at least six months.

Our long-term plan is to wait until the launch of 3G services which will give people a real reason to change handsets. We have grown a customer database of 320000 over the past five years. Looking after them is a business opportunity. However we dont need 105 staff to do that job.

We have restructured the business. The reductions in overheads give us a guaranteed business model. We are expecting further reductions in gross or average margins driven by reductions in commission.

Our business model is far less reliant on selling huge quantities of very fast-moving stock. In November our break-even was 7000 connections a month. We needed 2000 to 3000 high-end phones each month to do that.

We had supply problems with all the networks. But Orange and One 2 One from whom we are forced to buy stock directly caused bigger problems.

We do not now need the same volume of top-of-the-range phones. If margins stay the same we will have a profitable business.

I dont blame any network for our situation. They have also been victims of the stagnated marketplace.

Its just that the networks have more cash than we do. With hindsight we might have adapted a little more quickly he said.

This third employee was suspended in early January (Mobile News January 21) following the suspension of a national sales manager and a dealer manager late last year (Mobile News November 12).

A third employee who was suspended has now returned to work following an investigation said an Orange spokesperson.

However Orange would not comment on whether the (Cont P2) national sales manager and dealer manager suspended for misusing company funds are still being investigated or have been sacked.

Industry sources say the two men authorised irregular connections to two Rocom dealers that went into liquidation. Rocom is still challenging Orange over a clawback claim believed to be between 500000 and 1 million because it alleges certain Orange employees authorised the connections to the now-defunct dealerships.

Rocom chairman Bob Old maintains his firms position is unchanged.

Its a stand-off at the moment. We are still doing business with Orange and enforcing clawback and receiving commissions.

However we wont accept any clawback claim on two specific accounts as a matter of principle. Senior Orange people helped set up the deals and authorised them claims Old.