Vodafone, and snazzy gadgets, bring excitement to Barcelona

Barcelona is one of Europe's premier tourist destinations but happy couples looking to take a Valentine's break are better off giving the Spanish city a miss this year unless they want their romantic dinner ruined by the bleeping of thousands of mobile phones.

The Catalonian capital is hosting the 3GSM World Congress - the world's biggest mobile phone trade show - and, in line with the massive growth in mobile phones, the conference is also booming. More than 60,000 delegates are here to experience some of the latest innovations that the mobile industry has to offer.

With around 1,300 stands showing everything from Prada-designed phones to rat-catching wireless networks, visitors are unlikely to get much time to visit the Sagrada Familia cathedral or the Camp Nou stadium, the home of Barcelona football club.

Last year's conference was the first held in the Spanish city after the show outgrew its Cannes base. Then, the theme of convergence dominated as executives extolled the coming together of fixed-line, mobile and broadband access on one device.

Convergence still held sway during the opening day of 3GSM 2007 with Nokia launching a slew of flashy new handsets aimed at improving the mobile internet experience, as well as a new mobile TV-capable handset, the N77, which, according to Olli-Pekka Kallasvuo, Nokia's president and chief executive, would "take the TV out of your living room and into your hand".

Yet it was Vodafone's capture of India's fourth-largest mobile phone company that proved the key talking point. Vodafone shares surged to a 15-month high on the back of its acquisition of India's Hutchison Essar as delegates mulled whether the British operator would struggle to make a return on its substantial investment - the acquisition values Hutchison Essar at some $19bn (£9.8bn).

The Indian market is expected to have more subscribers than western Europe within three years, so it is no wonder that so much attention has been focused on the subcontinent at 3GSM.

Maintaining the Indian theme, the GSM Association called on Sunil Mittal, chairman of the Indian operator Bharti Airtel, to help launch a mobile money transmission service aimed at making it easier and cheaper for immigrant workers to send cash back home. "It will revolutionise the money transfer industry," Mr Mittal said.

Mr Mittal also weighed into the debate about Hutchison Essar. He said that Vodafone's chief executive, Arun Sarin, was right in paying $11.1bn for the majority stake in India's fourth largest operator, even though Bharti, India's largest operator, could not have justified the cost. "I wouldn't pay [that] - but if I was Vodafone I would," Mr Mittal said. He added that Bharti was ready to spread its wings outside India, the world's fastest growing telecoms market.

Yet Mr Sarin's success in snatching Hutchison Essar from underneath the noses of local rivals Reliance, India's second largest operator, and Essar, the owner of the remaining stake in Hutchison Essar, was considered risky by some experts.

One telecoms executive, with extensive knowledge of the Indian market, said Vodafone has much work to do extending Hutchison Essar's network into rural areas, and that the valuation left little room for slip-ups, given India's low average revenue-per-user rates.

"If you execute perfectly and if the macro-economic climate is flawless, you might make a single-digit return," the executive said.

Another risk is that Essar, a conglomerate controlled by the Ruia family, could yet take legal action to try to buy the majority stake in its telecoms asset. Essar has argued that it had a right of first refusal over the Hutchison stake.

Yet most observers were impressed with Vodafone's determination. John Delaney, principal analyst at Ovum, said: "This is a bit of a coup. We got used to Vodafone cutting a dash in the days of Chris Gent, but swashbuckling has never seemed like Sarin's style. Well, swashes don't come much more buckled than this one. Vodafone has, in effect, called Essar on its trump card. Essar's claim to first refusal has always been controversial, and it seems Vodafone is now convinced it won't stand up in court."

Mr Sarin will take to the stage this morning and is likely to be in a victorious mood. Whether his enthusiasm is enough to soften delegates' hangovers remains to be seen, but Vodafone has ensured that this year's conference has started with a bang.

Hot topics at 3GSM 2007

* MOBILE BROADBAND

With network upgrades and new devices designed to take advantage of faster data speeds, mobile broadband looks set to deliver in 2007.

* iPHONE KILLERS

The threat of Apple's iPhone has been taken very seriously, with LG, Sony Ericsson and Nokia all unveiling flashy new handsets to compete.

* MOBILE TELEVISION

A perennial 3GSM hot topic, and this year is no different. But do users want live broadcast TV or short on-demand clips in the style of YouTube?

* BUSINESS MOBILE

While the personal mobile market is becoming saturated, the business market remains relatively untapped. The industry is hoping improved email and location-based services will change this.