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July 2, 1990

MERCURY TO SPEND UKP3M WOOING RESIDENTIAL TELEPHONE USERS IN THE UK

By CBR Staff Writer

Having spent four years and UKP1,000m developing its network, Mercury Communications is now looking to get some return on the investment from outside the business community, which has been Mercury’s main customer so far. Eight years after it was set up the company is launching a UKP3m advertising campaign aimed at home telephone users, who regularly use their telephones for long distance calls. Mercury defines these as anything over 35 miles and reckons the savings on them with Mercury are 15 to 20%. The thrust of the campaign is to educate the general public about how Mercury operates and what the company offers in comparison with British Telecom. Since it began operating in 1986, Mercury has concentrated on international calls and businesses who make up 21,000 of Mercury’s subscribers. Residential customers account for 40,000 subscribers. Mercury hopes to increase this to 100,000 home customers by next April. In Hull, where users can do not have to go through British Telecom and can therefore access the Mercury network on their ordinary phones, the take-up rate for Mercury over long distance calls has grown to 45% in two years. This is not possible nationally, in most of the UK users still have to buy a phone with a special Mercury button to use the network. However the company is working with cable television operators to explore the possibilities of using their networks at the local level where otherwise calls have to be routed via the local British Telecom lines – hence the blue button phones. Mercury sees this type of joint venture with the cable companies as the way forward in increasing competition in the UK telecommunications market. According to marketing director Rod Attwooll, there is no sense in another telecommunications company competing directly in the UK. He reckons that it would not make any impact on British Telecom, but result instead in decreasing Mercury’s market share and therefore strengthening British Telecom’s hold. To reinforce his argument he cites the paging market, saying that while the smaller firms undercut each other, British Telecom continues to dominate. Mercury is also happy with UK prices for international calls. Despite charges to the contrary from the UK press, David Wickham, general manager of indirect services, believes that the UK sits well in pricing around the world and said that Mercury is not unduly worried about EC and Oftel inquiries into international call prices. Although a substantial proportion of of its revenue comes from international calls, according to Wickham, Mercury’s profit margins would not be too severely hit if the company were ordered to reduce its international tariffs.

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