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The BBC's Business Reporter, John Moylan
"Anecdotal evidence from the High Street suggests children are the main recipients"
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Thursday, 4 January, 2001, 17:40 GMT
Mobile phone sales jump
Man using a mobile phone outside a Vodafone store
Two thirds of UK people have a mobile phone
Mobile phone giants Vodafone and Orange have reported bumper sales over the Christmas period.

The figures have prompted analysts to revise upwards to as much as 5.5 million their estimates for the number of new mobile phones sold in the UK in the three months to the end of December.

This would mean more than two thirds, or 40 million, of the UK population now have a mobile phone.

In an earlier survey by NOP Research Group, about one in 10 Christmas shoppers had said they were buying a mobile phone as a gift for a friend or relative.

Orange leads subscriber increases

Vodafone and Orange were the first two to report figures, both turning in net new subscriber numbers in excess of analyst expectations.

Vodafone, the world's biggest mobile phone network operator, said it had added 1.42 million net new subscribers in the fourth quarter of last year, taking its UK total to 11.66 million.

Worldwide, Vodafone lifted its customer base by 13.2 million to 78.7 million by the end of the year.

"We are well on track to exceeding 50% customer growth for the fourth successive year," chief executive Chris Gent said.

Analysts said France Telecom-owned Orange might move up to second place among the four UK operators after increasing subscriptions by a net 1.56 million - the fifth consecutive quarter in which it will have added more subscribers than any other UK operator.

The company has now doubled its UK customer base to 9.8 million in the past year. Some 6.8 million of these are pre-pay users.

Cellnet might lose second spot

BT Cellnet might drop to the number three position in the UK, despite having added about one million net new users, analysts said.

It is not expected to confirm sales until next week. At the end of the third quarter of 2000, Cellnet said it had 8.74 million customers.

The fourth operator, One2One - owned by Deutsche Telekom - might have added up to 1.2 million net new users, the analysts said.

The enthusiastic take-up of new mobile phones was not without its hitches though.

Activation problems

Cellnet and Orange both admitted on Thursday that they had had temporary problems activating new mobile phones because of the exceptionally high demand.

A Cellnet spokeswoman said the company had doubled the capacity of its billing system in anticipation of high sales but had still been unable to cope with the numbers of people phoning up to activate pay-as-you-go handsets.

In the week before Christmas, Cellnet had sold as many phones as it had in the previous two months, she said.

Profits sacrificed?

Some analysts also voiced concern in light of the hefty sales that operators might be sacrificing short-term profit in the dash for greater customer numbers.

There was an additional danger that many handsets - whose prices are subsidised by operators - might have been given to or bought by people such as children who will not spend enough to justify the subsidy, the analysts said.

The concerns were not enough though to dampen the buying enthusiasm in telecoms issues that had been prompted by the surprise cut in US interest rates announced on Wednesday.

Vodafone shares closed up 14 pence at 239p on Thursday.

BT, which had earlier said it was selling its property to reduce debts, put on 53p to 613p.

Orange is due to be floated on the stock market by the end of March.

One2One is also a candidate for flotation later this year, as part of Deutsche Telekom's T-Mobil business.

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