Vodafone and Cellnet `to retain lead'

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The Independent Online
Vodafone and Cellnet will continue to dominate the UK mobile telephony market for many years to come in spite of the onslaught by fledgling rivals, Orange and Mercury One-2-One, according to a report by Societe Generale Strauss Turnbull, writes Mary Fagan.

SGST says the move towards new digital networks is slower than most people expected and that the opportunity for Orange and One-2-One to lure people switching from analogue to digital has been overplayed.

Vodafone and Cellnet have older analogue networks and are gradually migrating customers across to their new digital systems.

One-2-One and Orange, which have always been digital, hope to grab those people while they are considering the move to the new technology.

The report concludes that Vodafone and Cellnet will continue to maintain a large share of the overall mobile market and will also have a larger share of the higher-spending business market. "For years to come they will retain the vast majority of non-cost conscious customers," it says.

The report also forecasts, however, that the overall market will continue to boom with Britain on target to become the third country outside Scandinavia to achieve 10 per cent penetration. There are 5.5 million UK subscribers today, with Vodafone the market leader at almost 2.5 million and Cellnet not far behind. Some industry observers believe that the total will exceed 15 million by the end of the decade.

SGST says that the arrival of One-2-One and Orange, which recently floated on the London Stock Exchange, has greatly expanded the overall market by targeting consumers with lower prices. It also points out that while Vodafone is still the biggest in terms of subscribers, it "has found it more difficult to be the dominant force it was, not least because two of its three competitors appear to have more than a passing interest in profitability".

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