Vodafone Germany sees no cash flow in 3G

Boris Groendahl and Hendrik Sackmann

HANOVER: The German arm of mobile giant Vodafone does not expect a visible rise in revenue per user due to the start of new, third-generation (3G) services this year, its head said.

Juergen von Kuczkowski, head of Vodafone D2, said he expected to sell hundreds of thousands of mobile phones and laptop cards in the first year of the much-hyped but long-delayed 3G, which promises fast, quality audio, video and picture services.

But he said any effect on average revenue per user, or ARPU, would be diluted given the unit's large customer base of 25 million in Germany.

"With 25 million customers, you just don't see an effect on ARPU if one or two hundred thousands are using 3G," von Kuczkowski said. Vodafone D2 had 25.40 euros in monthly ARPU on average last year, of which 19.5 percent is revenue from data.

Vodafone is Germany's second-largest mobile operator, trailing Deutsche Telekom's T-Mobile.

It was the first German operator to start 3G services in February, although it opted for a phoneless launch and is currently only selling laptop cards as it said 3G phones of appropriate quality are still not available.

Kuczkowski criticised market leader Nokia's 7600 3G phone, the model that T-Mobile and mmO2 Plc's German unit O2 Germany will sell later this year, and said Vodafone would keep its cool and wait until they work before selling them.

"Even under competitive pressure, we won't bring phones on the market if we don't have clear quality standards," he said.

"They (Nokia) are bringing a product to market which... is forever dropping calls," he said. But he added that software upgrades for the model were now provided every other week and could yet resolve the phone's glitches soon.

Operators hope for rising revenues from data services such as music, pictures or videos to top up stagnating revenues per user from standard voice calls.

Kuczkowski said he was hoping more for videos his clients can shoot with new, high-quality camera phones and then send to other mobile phones, rather than betting on music.

"The whole video thing is more important than music downloads and streaming," he said.

© Reuters