Vodafone to see GBP13 billion 3G asset depreciation

12 Jan 2004

UK-based mobile giant Vodafone is to depreciate its assets by around GBP13 billion because of delays in launching 3G, according to local media reports. Vodafone had originally planned to rollout 3G services in mid-2002 and analysts fear that the delays, coupled with the heavy price paid for the licences, will weigh heavily on the cellcos share price in the coming months.

However, someone confident of the earnings potential of 3G is UK tycoon Richard Emanuel, the man who launched mobile retailer DX Communications and later sold the operation on to BT Cellnet for GBP42 million in 1999. Emanuel is preparing to invest around GBP15 million in the launch of as many as 50 new mobile retail stores in the UK’s high streets. Gambling on the potential of 3G’s voice, video and data applications, the first of the new ‘Tomo’ stores will open in East Kilbride and Telford next month; a pilot store has been operating in Nottingham for two years.

Tomo will be launched in direct competition with leading high street retailers Carphone Warehouse and Phones4U, both of which have just reported strong performances over the Christmas period. Europe’s largest retailer Carphone Warehouse is due to report its strongest ever fourth-quarter results this Thursday, with UK net connections expected to have risen nearly 20% year-on-year to total more than 1.5 million in the period; Phones4U claims its trading was up 25% over Christmas. Many analysts have pinned the upsurge in demand to heavy subsidies on handsets, which means entry level pre-pay phones have been selling for as little as GBP30, with Samsung and Siemens proving to be the penny-pincher’s favourite according to retailers.

United Kingdom, Vodafone Group, Vodafone UK