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Vodafone CEO sees no earnings risk from 3G

May 11, 2004

Reuters

Vodafone's CEO Arun Sarin said he does not expect 3G services to weigh on the company's global earnings because many customers would not use 3G phones for many years.

Three days after what one analyst called "an effective profit warning" from Japan's NTT DoCoMo — partly because of the costs of 3G — Sarin said this was only a danger if companies moved large numbers of customers to new services quickly.

"Is it a natural consequence in the 3G world that operating profits and revenues will be flat or neutral? No," he said.

"For us, 3G is no big bang. For us, it is an evolution."

Vodafone hopes to have millions of 3G phones in European shops from the second half of the year.

But Sarin said that in the advanced Japanese market, where 3G phones were first sold commercially in 2001, competition was fierce.

"Absolutely, it's tough," he said. However, he added, "This phase will pass".

He insisted that he remained fully committed to and happy with Vodafone's majority-owned Japanese business, Vodafone Japan which is struggling to gain market share.

Since Vodaone's failure to secure a takeover of US mobile phone group AT&T Wireless earlier this year — a purchase that would have given the group long sought-for control in the US and brought its brand across the Atlantic, Sarin has been under pressure to clarify his acquisition strategy.

Asked whether he had been frustrated at a lack of market support for the AT&T Wireless bid battle and whether he was disappointed at his failure to clinch the deal, Sarin said only "We will not be foolish about how much money we put on the table, whether it be in the US, France or ... anywhere else in the world."

As for possibly increasing Vodafone's stake of around 3% in China Mobile Sarin said he was content with a minority investment for now.

"It is unlikely that we will raise our stake in the near term," he said, adding, "if our investors want more exposure to China Mobile, they can buy it".

COPYRIGHT: © Reuters 2004

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