The profits result was below forecasts and the City marked ETs shares down.Earnings were also hit by the company having to write off 200000 after a leading manufacturer (believed to be (Cont P2) Nokia) cut the price of its most popular handset. Apparently European Telecom had ordered a vast quantity of this model phone for an order which never materialised and left it without price protection on the stock.

Another 300000 disappeared from the bottom line after problems with the French subsidiary and its internal control difficulties and discrepancies.

Start-up losses with the Global Telematics joint venture (Racal is the other partner) were greater than expected. Although Global Telematicss fortunes have been given a lift by the winning of a 1 million contract to supply Parcel Force with vehicle tracking systems.

Our core business is sound and growing with sales increases now being achieved in the stable and profitable markets of Western Europe which including the UK now account for over 90 per cent of our turnover said European Telecom chairman and chief executive Warren Hardy

The admission comes in the details of Vodafone Groups year-end results which described the performance of the dealer market as mixed with a strong first half balanced by weaker growth in the second half as the growth of pre-paid services and new retailers affected the traditional distribution channels.

But connections from Vodafones own shops doubled the rate of the previous year.

Vodafone Group chief executive Chris Gent also debunked the myth that pre-pay customers are not as valuable as users on contracts.

Speaking at a press conference last week at the Savoy Hotel to announce the Groups latest financial results Gent said that Pay As You Talk customers were (Cont P14) proving more valuable than those who paid a years up-front line rental for all-in-one packages.

This was because purchasers of all-in-one boxes were certain to churn to another network once the year was up.

Churn on Pay As You Talk of 20.1 per cent was running lower than contract churn of 27.8 per cent. The latter had risen slightly as some contract customers reverted to pre-pay. Vodafone was earning average net revenue of 159 a year from pre-pay customers up 10.4 per cent on six months ago.

We have been having conversations with them. This doesnt mean that we are turning our back on our existing channel partners who are still absolutely vital to our future said One 2 One spokesman Ian Volans.

Virgin is interested in getting into the mobile market. They cant do it on their own. We have a wholesale proposition that prompted them to talk to us. Weve been having discussions with them as to how we can help them expand the market even further.

There isnt any firm launch date partly because of our ownership situation. Its difficult to go the last mile and make a commitment that our potential owners may have a view on.

Volans agreed that whatever the eventual deal was it wouldnt be a matter of Virgin slapping its own logo stickers on One 2 One boxes.

Virgin could come out with a new-type of service possibly integrated into its existing airline financial services and banking operations. The Group is known to be keen to embrace e-commerce and internet trading.

Virgin has also made no secret of the fact that it wants a UMTS licence to offer third generation broad-band services such as video and high-speed data. A deal with One 2 One would be a perfect way for Virgin to test the mobile telecoms waters.

World Tech was raided by police and FCS Crime Prevention Inspectorate officers in April. They seized 1500 mobile phones of which 600 were reported stolen.

The police have completed their enquiries into World Tech and decided to take no further action against Oyediwura and Joseph who have now been released from their bail conditions.

Property seized including around 900 phones will be returned to them.

Their solicitor David Munro of Williamson and Soden said:

My clients acted honestly throughout and kept proper business records in relation to their transactions. No matter how careful you are and even if you comply with FCS requirements as to business records you are at risk from plausible but dishonest traders. There are still large quantities of stolen equipment being offered in the market place said Munro.

The dispute is so serious that JWE issued a trading statement to the City warning the row with BTCellnet would hit its earnings for the year ended March.

JWEs shares plummeted on the news and at the time of going to press were languishing at 81p down from around 2.40 a year ago. The share price had been hit earlier this year by a previous trading statement warning that pre-pay had hit JWEs anticipated profit levels.

JWE chief executive Tony Farmer told Mobile News:

The trading statement was issued because in our position as a public company we have to alert the market to any potential under-performance in terms of our profit. We felt it right to alert the market to the fact that we are having the discussions we are with BTCellnet.

Some dealers say JWE is not the only service provider having problems with BTCellnet over ongoing revenue. Trade sources indicate JWEs problems with BTCellnet are connected with it selling part of its base to Cellnet last year for 200000.

One trade source who (Cont P2) follows JWE closely theorised that the dispute with BTCellnet was just a smoke screen for poor performance.

That sale boosted their profits for their first year as a public company. This years profits look less good because they have not replaced the business they sold with new business.

Their income has dropped considerably because of the sale to BTCellnet. They are saying they are in dispute when they are not in dispute at all.

This is an excuse for poor performance. They miscalculated the effect the sale of part of their base would have. Their problem now is once you lose credibility in the City its virtually impossible to get it back.

BTCellnet general manager for distribution Peter Gibbard said:

Its business as normal with JWE. We are carrying on normally. Ill have to leave any comment about outstanding issues to them. We didnt have anything to do with their press release.

The customer base of the business just sold is thought to be less than 6000 subscribers most of them corporate users. Destia was also attracted to the value-added services such as Tellular Phonecell SSX system which cuts corporate mobile calls by up to 71 per cent.

Destia provides domestic and international least-cost routing services in the USA and Europe.

With the acquisition (of Wave-tech) Destia has made significant steps towards completing the second stage of its plan to provide customers with a completely integrated billing system said Eli Katz managing director of Destia in the UK.

The third and final stage will be becoming an internet service provider. This will mean that customers will be able to receive just one bill for all their telecoms services fixed line wireless and internet.

Also expected on Thursday is the commercial launch of Wildfire the voice-activated system that gives every Orange phone voice-dialling at network level. Wildfire also allows voice-activation of stored numbers and a host of other call administration features that can be summoned up by voice commands.

Orange head Hans Snook is also expected to reveal details of new handsets such as the Motorola triple-band phone launched earlier this year and explain more about Oranges progress in developing a video mobile phone (see Sharp End).

Charges on Frequent Caller Plus fall from 22p to 20p a minute (peak). Regular Caller Plus drops from 33p to 30p a minute (peak) and Occasional Caller Plus charges come down from 37p to 32p a minute (peak).

Over 1.5 million BTCellnet users are now enrolled in the First programme which puts people automatically on the best tariff for their particular usage.

Orange is concerned that it has spent many millions of pounds creating a premium and aspirational brand which is being under-mined by give-away offers by some dealers.

However the network knows that any attempt at illegal price fixing will land it in hot water with the Office of Fair Trading. The network risks being at the receiving end of legal action by the OFT unless it treads very carefully.

For this reason not one of Oranges distributors is prepared to say a word either on or off the record about what is going on. But Mobile News understands that it has been made clear to some distributors that any breach in their terms of trading could result in termination of their account.

Orange has had meetings with its distributors such as Cellcom EBS Talking Point and Complete Mobile Communications.

The whole thing is being done in a spirit of co-operation rather than confrontation said one trade source.

Orange has expressed concern to its independent channels about its perceived devaluing of the brand image and the way that aspects such as free connections are devaluing the value of Orange and taking it back to the old days of give-away phones.

Orange director of sales Gareth Jones said Oranges dealings with its distributors were of a confidential nature and he declined to comment further. Similarly Cellcom boss Paul Cohen responded to all questions with a terse no comment.

His action is a defence against a claim lodged by One 2 One in February claiming Stone owed the network 269000 for sales of phones SIMs and services ordered between March and April last year. One2One sent Stone 30 invoices due for payment by July. But he disputed these payments claiming his dealer agreement had been wrongly terminated

Stone is now challenging One 2 Ones right to terminate loyalty bonuses he claimed were earned but not paid to him. He is taking legal action over the fact he is now unable to earn future loyalty bonuses.

Stone continues to refuse to pay One 2 Ones invoices. He says his own counterclaim of over 400000 is made up of unpaid commissions and future loyalty bonuses Stone continues to refuse to pay One 2 Ones invoices. He says his own counterclaim of over 400000 is made up of unpaid commissions and future loyalty bonuses.

In his counter-claim and Defence Stone argues he is owed 25908 for outstanding volume bonus 47199 for outstanding commissions and either 482017 for future bonuses he would have earned over 10 years or 363052 for bonuses over five years.

His counter-claim admits he has not paid the 269134 worth of One2One invoices and states:

The Defendant is entitled as a mattrer of law to deduct and set off all sums owing and due to him from the First Claiman (ie One 2 One).

Clause 13.2 of the Agency Agreement purports to forfeit the Defendants accrued entitlements following a termination of the Agency Agreement for any reason. The Defendant will contend that Clause 13.2 does not affect his entitlements under the Agency Agreement.

Stone had been a One 2 One dealer since 1994. He received his dealer termination notice on April 7 last year. One 2 One cited clause 12.4 of its dealer agreement which enables it to terminate a dealer in the event of the dealer failing to achieve any one of the minimum performance levels set in schedule five of the agreement.

Stones lawyers say One 2 One has not yet substantiated which performance levels have allegedly not been reached.

If One 2 One does not substantiate the definitions Stones lawyers intend to challenge the validity of Clause 13.2.l.

One 2 Ones legal spokesperson Guy Perring said:

Clause 132 of the One 2 One dealer agreement states if a dealer agreement is terminated the dealer has no further entitlement to sums due that otherwise may have been payable if the agreement had not been terminated.

This means Stone would only have been entitled to further loyalty bonuses if he was still an authorised dealer. He says One 2 One has withheld commissions loyalty and volume bonuses earned before his contract was terminated.

His solicitors claim One 2 One is acting unfairly in trying to deny him commissions for work he has actually done

Stones lawyers maintain the clause is ambigious and that the network is interpreting it to its own advantage. They say the Clause is invalid under the Unfair Contract Terms Act.

They argue that the clause is an invalid penalty because he has already paid a heavy penalty by being struck-off as a dealer.

The controversial dealer agreement entitles dealers to 90p loyalty bonus on customers who have purchased a SIM have remained connected for a minimum of six months. After this time the dealer would earn 90 pence per customer per month until contract termination. Stone says he was earning around 9000 a month in loyalty bonus. Under Clause 13.2 One2One intends to halt this money.

This is not the first time Stone has had a run-in with a network or service provider. In November 1994 his company Network Communications was one of 50 expelled Vodac dealers.

No improprieties were ever alleged. Vodac said the decision was based upon statistics and for our own business reasons.