Vodafone will roll out 3G networks in the UK and the rest of Europe by the end of this year — but it will hold fire on promoting them. The company does not see 3G becoming a mass market on this continent until 2004.
Sir Christopher Gent, chief executive, said at the group's preliminary results: "We will open 3G this year but will not be promoting it."
It is applications that matter rather than technology, he says, and current data applications will run well over 2.5G networks: "New growth can be made on 2.5G and is not dependent on 3G."
As a result, Vodafone will concentrate its advertising effort on building brand loyalty through marketing and promotion campaigns, and new applications suitable for 2.5G.
Among the services to be promoted by the Vodafone Live campaign will be picture phones, which will debut by the year-end.
They will be based on a Japanese service, Sha-mail, which allows subscribers to take digital snaps and e-mail them to friends. Four million Sha-mail phones had been sold in Japan by the end of 2001. The video equivalent, Movie Sha-mail, got 115 000 users in its first month.
"It's a killer application," said Sir Christopher. He says there will be enough handsets ready for Sha-mail launches in the UK, Germany and Portugal.
Sir Christopher is putting his faith in 3G as a longer term play, when it will provide not just better performance for 2.5G applications and some of its own, but also tariff reductions as it becomes more capital-efficient.
Last year, the company spent less than 10% of its £4.1bn capital expenditure budget on 3G. In the current year, spending is set to rise to £6bn, 30% of which will go on 3G.
Vodafone also confirms that it will run wireless lan (wlan) networks alongside its GSM and 3G offerings: "We are working with partners on hotspots to avoid 3G capacity drain where it's not necessary."
Vodafone posted an operating profit of £7bn on turnover of £22.8bn for the year to end-March. But after write-downs on a series of businesses, its pre-tax loss was £13.5bn, the largest in UK corporate history.