Peoples Phone pulls float after slow Christmas

Click to follow

Industrial Correspondent

Peoples Phone, the high street mobile telephone company, has pulled its planned flotation on the London Stock Exchange after a disappointing Christmas.

The company, founded by Charles Wigoder in 1988, said market sentiment had been hit by poor trading conditions in the UK mobile phone sector in the run-up to Christmas.

Peoples Phone, which is advised by Barclays de Zoete Wedd and UBS, is one of many companies that act as "middle-men" between network operators, such as Cellnet and Vodafone, and consumers who buy the telephones and the service. The flotation, originally scheduled for early this year, was expected to value the company at pounds 150m-pounds 170m.

The decision to delay may fuel speculation over the timing of the expected listing of Orange, the newest mobile network operator, owned by Hutchison Whampoa and British Aerospace. Orange's flotation, which analysts believe will value the company at more than pounds 2bn, is widely expected to go ahead in March.

Peoples Phone said the move to postpone the flotation was also prompted by its own lower-than-expected market share in December, adding that this was likely to have continued into January because of the highly competitive offers available from other retailers.

It added in a statement that the board remained confident about the medium- and long-term growth prospects for the company.

Figures from Vodafone and Cellnet, the main network operators, showed that the total mobile telephone market fell sharply in December compared with the year before, when a record 400,000 people signed up for the networks. There is a view that people are much more conscious of the on-going cost of using the telephones, the initial price of which can be extremely low.

Adding to the gloom, the Consumers Association recently alleged that many thousands of mobile telephone subscribers are disillusioned, with about one in four regretting the choice they made and many deciding to disconnect.

A report by the association, due in March, will conclude that the industry has failed to give a good enough service for the prices charged and that the networks and equipment are too often unreliable. It will criticise the tendency to lock people into long-term contracts with expensive penalty clauses for those who want to opt out before the agreement expires.

In spite of the setbacks,1995 was the best year yet for the industry with Vodafone ending the year with over 2.33 million subscribers and Cellnet only a few tens of thousands behind.