Cellnet shaken as MD joins growing exodus

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The Independent Online
Howard Ford, managing director of Cellnet, the UK's second-largest mobile phone operator, yesterday resigned from his post with immediate effect.

No explanation was given for the resignation, which had come as a complete surprise to Cellnet employees, though the move follows growing criticism of the company's performance in recent months. A Cellnet spokesman said: "We have not been told what was behind this, or whether he resigned or was fired. You must draw your own conclusions."

Last night there were signs that British Telecom, which has a 60 per cent stake in Cellnet, was moving to impose greater control on the network, which it owns with Securicor. BT said Stafford Taylor, managing director of its personal communications division, would "involve himself more directly in the management of the business until a successor is appointed". Cellnet said Simon Moffat, finance director, would act as a temporary managing director.

Mr Ford is the second senior executive at Cellnet to leave over the past six months. Late last year Steve Rowley, marketing director, moved to another job. Mr Ford, aged 45, has run the company for less than three years, having moved from a senior post with the computer giant IBM.

The resignation is the clearest sign yet of turmoil within Cellnet after a series of poor subscriber figures. Though the number of new customers joining the network has been encouraging, a larger proportion of people have decided not to renew subscriptions to the network than with Vodafone, the market leader, or Orange.

Though Cellnet does not publish monthly subscription figures, analysts suggested that its net new customer numbers rose by just 10,000 a month in January and February. Orange's net subscriber base expanded by about 30,000.

One reason appears to be Cellnet's policy of offering attractive discounts for customers, in effect subsidising the price of telephone handsets. The strategy apparently backfired last year as consumers failed to use the service as much as anticipated. The whole industry became gripped by a price war which hit the share prices of the two quoted stocks, Vodafone and Orange.

James McCafferty, a telecommunications analyst with stockbroker Hoare Govett, said: "Their net connection figures have been very disappointing this year. The problem has been aggressive subsidies to dealers to sign up customers over Christmas 1995. These people have been leaving the network over the past few months."

Another problem has been the need to switch existing customers using the older analogue service to Cellnet's expanding digital network, in which it is investing more than pounds 1bn over the next five years. Cellnet recently signed up its millionth digital subscriber, second only to Vodafone. But encouraging these subscribers to stay with Cellnet has meant offering more incentives.

BT has made no secret of its desire to buy out Securicor's 40 per cent stake in Cellnet and assume overall control. The move was blocked by the Government in 1995.