Tom Alexander: If selling phones is all about image, a man with two DB4s will always be out in front

He knows what his customers want - and it's not 'horrible 3G bricks'. Virgin Mobile's boss talks to Clayton Hirst about life at the fashionable end of the market, and about his own driving passion
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The Independent Online

Becoming the chief executive of Virgin Mobile was never part of Tom Alexander's game plan. Until the mid-1990s, his desk job was always meant to be a sideline - a way of funding his career as a motor racing driver. After leaving school he rose to become a member of the British karting team, won the European championship and was ranked seventh in the world before setting his sights on breaking into the elite of Formula One.

Becoming the chief executive of Virgin Mobile was never part of Tom Alexander's game plan. Until the mid-1990s, his desk job was always meant to be a sideline - a way of funding his career as a motor racing driver. After leaving school he rose to become a member of the British karting team, won the European championship and was ranked seventh in the world before setting his sights on breaking into the elite of Formula One.

"Mobile communications was always the in-fill job," he confesses.

But 11 years ago, Alexander turned his back on the racetrack. "I had to go and get a proper job," he says. "The challenge in motor racing is sponsorship. I had a bit of bad luck and gave up racing for a season when a sponsor let me down. I always thought I was going to go back into it, but I found myself at 35 thinking, 'Actually, I'm getting a bit old for this'."

Now at the age of 46 and still racing Aston Martins on a semi-professional basis, Alexander can't be too disappointed with his day job. In May, Virgin Mobile, which is 75 per cent owned by Sir Richard Branson, is expected to announce profits of just under £100m for the year, making it the most profitable business within the Virgin group.

Alexander fits very much into the Virgin mould. He's confident, casual in style, and there is the obvious interest in extreme sports, which is shared by many of the bosses of Virgin companies. It is no wonder Sir Richard poached him from BT's former mobile arm, Cellnet, to launch Virgin Mobile.

In November 1999 Virgin Mobile became the country's first "virtual" network operator. Instead of owning and maintaining thousands of masts and base stations, it leases airtime from T-Mobile.

Whether by luck or design, the timing of Virgin Mobile's launch was spot on, just as mobile phones were becoming mass market partly through the growth of pre-pay. Today the company has five million customers in the UK and a market value of £542m.

Alexander then steered Virgin Mobile to its flotation on the London Stock Exchange last summer, by first settling a long-standing row with T-Mobile and then convincing nervy institutional investors that they wouldn't lose their shirts by investing in a telecoms company.

But it hasn't been all plain sailing. Two months after the float, Virgin Mobile issued what appeared to be a veiled profits warning, alerting the market to lower-than-expected future revenue growth. This walloped the share price and for a few weeks Virgin Mobile's name was mud in the City.

Alexander blames the analysts. "This wasn't a case of us changing our plans - we were trying to manage the expectations of some analysts who were out to lunch. We underestimated the importance of getting out there and educating these guys. We found that there was a big spread of people - those who really understood the business and made an effort to talk to us, and those who were literally putting together reports without ever speaking to us."

Part of the problem, says Alexander, was that the analysts were looking at the wrong numbers. "We are a different animal. We are not quite a Vodafone. We are actually closer to a Carphone Warehouse in some ways. We are a combination of the two. There is still an education process to do."

Earlier this month, analysts at investment bank Goldman Sachs downgraded revenue forecasts for Virgin Mobile after the launch of Stelios Haji-Ioannou's low-cost easyMobile and following gloomy comments from O 2 on the outlook for the UK market.

Alexander believes that the fears are misplaced. "The business in the UK is going like a train - there are plenty of growth opportunities," he says, ignoring any reference to the performance of Virgin Trains.

He dismisses the launch of easyMobile and the mini price war it is waging with Carphone Warehouse as of little relevance to Virgin Mobile. "I don't think it's an obvious threat. Easy is selling a SIM card over the internet. This will appeal to the value hunters but it's not really the same market for us. Our customers are youth oriented and the young at heart. They want the latest fashionable phone - that what's really important to them. They can go into a Virgin Megastore and see all 26 phones lined up. And - I would say this, wouldn't I? - but the easy brand is nothing like as powerful as the Virgin brand."

Of greater threat to Virgin Mobile, admits Alexander, is "3", the mobile phone company owned by Hutchison Whampoa. The company, which was the first to launch high-speed 3G internet services, now has three million customers in the UK after aggressively undercutting its main rivals' call charges. On Thursday Hutchison admitted that it had spent an average of £186 to attract each new customer in the second half of its financial year.

"I think '3' is a much more serious contender. It has a network to fill so it is subsidising bigger, uglier, more expensive phones to get customers to buy them," says Alexander, who describes some of the "3" phones as "horrible bricks".

Alexander says that a dinner party he and his wife went to recently has reinforced his views on 3G. "The conversation got on to mobile phones. The perception was that the industry, having paid all that money for the 3G licences, was coming up with all these nasty little services as way of conning kids into spending more money on stuff they didn't want."

Despite this, Virgin Mobile will in the next few weeks launch its own 3G services. Rather than have a great fanfare, Virgin will quietly introduce the new handsets into its range. But Alexander predicts that the extra bulk and weight of 3G phones will stop them becoming top sellers.

"It isn't going to be the massive revolution people have predicted. 3G phones are not as good as [the standard] 2G ones. They'll get better."

Alexander's mind is never far off motor racing, and soon he's back on the subject of cars. Next weekend his own racing season will begin in earnest, and will see him at the wheel of his two Aston Martin DB4s.

He says: "The racing season refreshes me. It's fantastic relaxation, much more than sitting on a beach doing nothing. If you go racing for a weekend, then you can't think of anything other than racing."

Of course, winding down in this way is rather a good thing for Alexander, who never really wanted to become a telecoms executive in the first place.

BIOGRAPHY

Tom Alexander

Born: 10 March 1959

Education: Millfield School, Somerset

Career

1974: takes up kart racing

1978: sales engineer, Key Pneumatics (engineering company)

1980: technical sales manager, Mecman (engineering company)

1983: sales and marketing manager, Altek Automation (manufacturing company)

1986: marketing manager, Telia (Swedish telecoms company)

1988: division manager, TCC (Swedish telecoms company)

1991: deputy commercial director, Cellnet (BT's former mobiles arm)

1999: chief executive, Virgin Mobile

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