Vodafone Explains as It Slides

Vodafone Group PLC (NYSE: VOD) found itself treading carefully over old ground today as the wires buzzed with news of 'mobile picture messaging' services, a delayed 3G launch, and talk of an increased presence in France. Of more concern was a four-year low for its share price on the London Stock Exchange.

The aftershock of WorldCom Inc.'s (Nasdaq: WCOME) woes and news of the departure of CEO Jean-Marie Messier from debt-laden Vivendi Universal dragged the tech markets down. The Vivendi situation -- it lost 25 percent of its capitalization as concerns over its debt grew -- further fueled talk that Vodafone might step in to snap up Vivendi's 44 percent stake in French telco Cegetel, which controls one of France's 3G license holders, SFR.

Vodafone already owns 15 percent of Cegetel, which holds 80 percent of SFR. Vodafone owns the other 20 percent in SFR, giving it a current holding of 32 percent. Given that Vodafone is keen on majority stakes in mobile operators, the Vivendi stake in Cegetel must be quite a temptation. Quite whether investors would be so keen on seeing Vodafone hit the acquisition trail shortly after posting a whopping annual loss is debatable, and did not help the downwards pressure on the share price (see Vodafone Turns Deep Red, Focuses on Cost Control).

What is clearer is Vodafone's position regarding multimedia messaging services (MMS) and its 3G timeline -- well, it's clear to Vodafone, at least. Following a report in a Japanese publication, Nihon Keizai Shimbun, which quoted the operator's CEO Chris Gent, news spread that "picture messaging" services would launch in Europe this autumn (with the U.K. lagging behind other countries) and that "full-scale" 3G would not be available until 2004.

Bobby Leach, Vodafone's head of group financial media relations, is adamant that no specific timescales were mentioned. "I sat in on that meeting, and we didn't give any specific dates. There may have been some misunderstanding in the translation."

But hasn't Vodafone already launched MMS in some territories? Indeed it has. "We have already launched multimedia messaging in Germany [D2 Vodafone], [Vodafone] Portugal, Italy [OmniTel], and through our affiliate in Switzerland [Swisscom Mobile, of which Vodafone owns 25 percent]," Jon Earl, senior group communications manager, tells Unstrung. "We will launch in other major European territories before the end of 2002, including the U.K."

On the question of what a "launch" means, and the 3G timeline, Earl, who has obviously taken a few calls about total national coverage launches in his time, gets pretty pumped up. "Let's just clarify something here. When a service is launched, it is never launched at the level that service will be in two years time. It's just not possible." Right. They have to start at quite a low level and build up from there.

So what about 3G launches? Can we clarify the situation? "Nothing has changed. We will be switching on the 3G networks before the end of 2002, and then we will roll out from that point on. Services will not be 'mass market' until 2004," says Earl.

— Ray Le Maistre, European Editor, Unstrung
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