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Technology Stocks : Vodafone-Airtouch (NYSE: VOD) -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (3119)	4/3/2001 7:58:13 AM
From: MrGreenJeans	Read Replies (1) \| Respond to of 3175

UK mobile phone growth slows in Q1 Orange likely to come out on top for 5th of last 6 quarters By Gareth Vaughan, FTMarketWatch 5:05:00 PM BST Apr 2, 2001 LONDON (FTMW) - Britain's four mobile phone operator's are for the first time expected to report that the growth of new mobile phone customers in the UK slowed in the first quarter as the percentage of the population using a cell phone rose above 70 percent. Go deeper According to analysts at Lehman Brothers and Investec Henderson Crosthwaite, over the next week or so the operator's will say that a total of 3.1 million Brits', or 5 percent of the population, began using cell phones in the first three months of 2001. Jonathan Lewis of Dresdner Kleinwort Wasserstein is looking for a slightly lower figure of 2.9 million. That compares to 5.7 million new subscribers in the final -- Christmas -- quarter of 2000 and the expectations are also below the 3.2 million net new customers the operators gained in the first quarter of 2000. Orange tops chart The France Telecom-controlled Orange [UK:OGE] is expected to have gained the most new customers for the fifth time in the last six quarters. Investec's Christian Maher is expecting Britain's third biggest mobile phone operator to have gained 1.05 million net new subscribers. Both Lehman and Lewis also expect Orange [FR:007919] to have added just over 1 million customers. "We note that Orange has been the most aggressive of the operators during the quarter in terms of advertising and promotional activity," Lehman said in a research note. BT Cellnet is expected to come in at number two, according to Investec and Lehman. Investec's looking for Cellnet to add 800,000 new customers and Lehman expects the British Telecom [UK:BTA] [US:BTY] owned group to have added about 900,000 new customers. Fight for No. 2 That would leave Cellnet just ahead of Orange as Britain's number two mobile phone operator with a total customer base of about 11.1 million and Orange just behind with about 10.8 million. However, Lewis expects Cellnet to have only added 500,000 new subscribers meaning that Orange would've pulled ahead. Investec is looking for Vodafone [UK:VOD] [US:VOD], Britain and the world's biggest cellular phone operator, to have gained around 675,000 new UK customers. Lehman's expecting Vodafone worldwide to have added 4.7 million new customers with about 650,000 of them coming in the UK. The smallest of the four UK operators, Deutsche Telekom's [DE:555750] One 2 One, is expected by Investec to have added 600,000 new customers, while Lehman's looking for a figure of about 550,000. Dresdner Kleinwort Wasserstein expects both Vodafone and One 2 One to have added 700,000 new customers. The net new customer number figures exclude the operator's churn rates, or the number of customers quitting their services. For example Vodafone had a churn rate of 24.1 percent in the six months to November while Orange's 2000 churn rate was 9.2 percent. BT Cellnet's churn rate in the third quarter was 29 percent. One 2 One doesn't publicly disclose its churn rate. Squeezing revenue Recent moves by both Vodafone and One 2 One to cut the subsidies and incentives they offer to new customers adopting pre-pay services aren't expected to be felt until the second quarter. These moves, which are expected to be followed by Orange and BT Cellnet, mean that free calling minutes, free network connection and even subsidized or free handsets, may be a thing of the past as operators turn their attention from building market share to making money. See related story. Indeed, Lehman expects 90 percent of new customers added during the first quarter to be pre-pay customers. The revenue cell phone operators generate from prepay customers is significantly lower than income they get from higher paying contract customers. For example BT Cellnet had annual revenue per user (ARPU) of £103 from pre-pay customers in 2000 versus £515 from post pay, or contract customers for last year. Still, analysts expect the trend of slower growth to accelerate during the rest of 2001 because with more than seven out of ten Brits' now using a cell phone, there's simply a much smaller number of potential customers and the companies are starting to focus on maximizing returns from existing customers. "The slowdown will be more marked in the next three quarters," said Maher. Lehman see growth Still, Lehman expects 21 percent of the population to start using mobiles this year, which although less than the 26 percent last year, would mean that some 88 percent of the population would own cellular phones by year's end. According to Lehman, the slower growth of new subscribers is a good thing for the companies' bottom lines both in terms of ARPU and earnings before interest, tax, depreciation and amortisation (Ebitda) margins. "We see fewer net additions for the mobile operators as a positive, allowing financial performance to improve as customer bases mature and less is spent on subscriber acquisition costs," the investment bank said. The addition of 5.7 million new customers in 2000 meant that the percentage of Brits using cell phones rose to 67 percent at year's end, up from 41 percent at the end of 1999. See related story. Orange is set to report its new customer numbers on either Tuesday or Wednesday with Vodafone following on Thursday. One 2 One said it would report sometime this week and BT Cellnet is due to at the end of next week. Gareth Vaughan is a reporter for FTMarketWatch in London.