Charles Dunstone, the ebullient entrepreneur behind the Car-phone Warehouse chain, was in sparkling form at the UK Institute of Directors' annual dinner earlier this month. Dunstone told his audience, which included Finance Minister Gordon Brown, that he loved downturns because "that's when business becomes interesting."
Well, Dunstone has got his wish, and for the boss of Britain's largest mobile phone retailer, business has just become terribly interesting.
Mobile operators had been praying for a bumper Christmas, just like last year's -- to reverse the trend set by sweeping redundancies, savaged marketing budgets and numerous technological setbacks. But unfortunately for the networks, this year Santa is more likely to resemble Scrooge.
Last week, in a move that shocked the industry, respected research firm Gartner Dataquest announced that the industry's days of seemingly inexorable growth were over. Gartner said worldwide shipments of mobile phones had fallen a whopping 10 percent to 94.4 million units in the third quarter of this year, compared with the same period the previous year. Much of the blame for the drop lay with the industry's powerhouse, western Europe, where shipments fell from the second quarter to the third -- contrary to all past trends.
The figures were released just as the mobile phone industry seemed to have turned a corner. Many in the City have been predicting that the industry's worst days are now firmly behind it, making the operators' shares attractive. Tim Rees at fund manager Clerical & Medical says: "There is a much greater appetite for risk, which means that investors are prepared -- again -- to believe in the growth potential of telecommunications."
Rees believes macroeconomic factors have helped stimulate renewed interest in telecom stocks. "Interest rates probably don't have much further to fall; with money this cheap and the market on both sides of the Atlantic up about 15 percent since Sept. 11, the medicine being administered by the central banks looks to be working."
Just as the telephone companies were among the first to feel the pain when the bubble burst in March last year, so they looked to be the early beneficiaries of a tentative return of investor confidence.
Take Vodafone, for example. Its share price fell to 118 points earlier this year; now it is trading above 180 points.
Then came the Gartner figures, sowing new doubts. "Everyone was riding on the euphoria of last year. People were predicting that the industry was going to sell an amazing 500 million handsets this year, compared with 413 million last year," says Ben Wood, Gart-ner's European telecoms research director.
Gartner now predicts total sales this year will be around 400 million and suggests that the industry is capable of "more stable growth" in the future, somewhere between 10 percent and 15 percent. With 77 percent of the UK's adult population now owning a mobile phone, the days of soaring sales growth are at an end.
Christian Maher, telecoms expert at broking group Investec, says a saturated phone market is not necessarily bad. "Margins are improving at many of the mobile companies as the growth in subscribers tails off. Don't forget that the build-up of subscribers was achieved by offering heavily discounted handsets and other benefits. As growth slows, costs come down."
The Gartner figures mark an end to an extraordinary time. The telecoms bubble -- and the mobile phone bubble in particular -- was far bigger and far more sustained than the internet bubble that blew up around it. As the industry enters a more mature, realistic phase, the question is how will the operators continue to drive revenue growth.
Their intention is to drive average revenue per user (Arpu). "Arpu was high in the early days, but as the operators have tried to drive penetration, it has plunged," says Peter Richardson, head of research with investment bank Soundview Technology.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from