Cellular kings have hot line to boom time

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The Independent Online
TO CROSS the Stoke-on-Trent ring road from the city's railway station involves negotiating a pedestrian subway of Byzantine complexity, lined with dull and crumbling tiles covered with graffiti. What a pleasure it is to emerge by the handsomely re storedVictorian building that once housed Minton Hollins, tilers to the House of Commons and many a suburban villa.

The Minton factory had been empty for 30 years until Caudwell Communications turned it into its corporate headquarters last summer with a £500,000 grant and an additional outlay of £1.8m.

From tiles to telecommunications, manufacturing to sales: the sooty landscape of the Potteries, immortalised by Arnold Bennett, has changed with the times.

For John Caudwell and his brother, Brian, times have changed beyond measure since they started selling mobile phones from a 10ft-square room behind their car showroom. It was 1986, and "yuppies" were thin on the ground in Stoke. John had experienced somedifficulty in buying a phone for his own car. Eventually he went to Motorola, the manufacturers, and was told he would have to open an account.

"I bought 26 and started a dealership," he recalls. " It took us six months to sell them. At that time, they were considered expensive toys for executives. The retail price was between £1,500 and £3,000. Reasonable profits but low volume. Still, we fore s aw that the market would grow, because the price was coming down and awareness was going up. Plumbers and TV repair men were going to find them very useful. It was obviously going to be a buoyant market."

It turned out to be a shrewd hunch. The UK cellular market grew by 43 per cent in 1993 and by more than 50 per cent last year. There are now more than 3 million users, and analysts are forecasting four times that by the end of the century.

The Caudwell brothers were well placed to take advantage of the boom. They are now Europe's biggest independent wholesale distributor of cellular phones. Turnover has rocketed from £1m in 1989 to a projected £80m-plus this year. "We're projecting £250m by the time of our stock market flotation in 1997/98," says John Caudwell.

Overseas sales already account for 30 per cent of business. The export drive began soon after members of the Chinese community in Stoke began buying 10 phones at a time. "We didn't know what they were up to at first. But it became apparent that they weretaking them out east and selling them. There was obviously a market there, so we went to Hong Kong and looked into it. In each country, we try to build up a large customer base of people interested in selling our products."

Mr Caudwell joined Michael Heseltine's trade mission to the new South Africa. Sales there are booming. India is next. "Any country with an undeveloped infrastructure is ripe for mobile phones. It's easier to put in a cellular system than landlines."

The Indian network opens in May. By then, Caudwell Communications will have more staff. Already it has more than 250 in sales, purchase and administration. A big recruitment drive for senior executives is under way.

Would-be recruits are reminded of the company's mission statement: "To become the world's largest independent telecommunications company with the greatest number of employee millionaires".

The few who make it through a lengthy and intensive vetting process will be offered generous share options. "It gives them an incentive to work their butts off," says Mr Caudwell. "To get the right employees, you have to be prepared to share wealth with them. We would expect to create five to ten company millionaires by flotation time."

q Caudwell is the sort of ambitious and innovative company that the Independent 100, run by the Independent on Sunday in conjunction with accountants Price Waterhouse, aims to recognise.

The listing, now in its fifth year, is based upon annual compound sales growth over the five-year period to 30 June 1994. To mark the special achievement of continued growth by established companies, there is a separate Price Waterhouse Middle Market Award for businesses that already had sales of more than £5m in the financial year to 30 June 1990 or more than £15m in the year to 30 June 1994.

For an entry form, write to Julie Harwood at Price Waterhouse, Southwark Towers, 32 London Bridge Street, London SE1 9SY. Completed forms must be returned no later than 24 February 1995.