Doubts about mobile phone recovery

TELECOMS magnate John Caudwell has poured scorn on hopes of a mobile phone recovery fuelled by new high-speed Internet services.

Caudwell, who made an £850m fortune from building the High Street chain Phones 4U, doubts network operators such as Vodafone and Orange can stop the slide in the amount mobile phone users spend on calls.

The tycoon - who drives a £250,000 Bentley, flies to customer meetings by helicopter but cycles to work - warns regulators are more determined to force operators to cut prices.

At the same time, competition - especially from new entrants such as the Hutchison Whampoa-backed '3' - has grown more intense.

In the past, operators could offset these trends by signing up more customers. But with more than 80% of people in most major markets owning a mobile phone they no longer have that option.

The telecoms industry is banking on increased take-up of expensive 'third generation' services to turn around

declining profitability. But Caudwell fears these fancy new internet services, such as football match clips, will only arrest the decline at best.

'Profitability can only go one way and there is no growth in revenue to hide the fall,' he said.

Scepticism from such a leading industry figure may damage hopes of a recovery in mobile telecoms. His views were underscored by a warning from Nokia of falling handset prices.

Caudwell says his gloomy outlook was a key reason for his recent £405m sale to Vodafone of his Singlepoint connection and billing business. Vodafone maintains 3G will give a big boost to sales and profits.

Caudwell is now looking to use the Singlepoint proceeds to spend up to £300m to diversify from mobile telecoms. He will begin his search once European regulators have approved the deal, expected within the next couple of weeks.

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