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June 13, 1990


By CBR Staff Writer

In reporting significant increases in both turnover and pre-tax profit for the year to March 31 1990, Racal Telecom Plc’s chairman Sir Ernest Harrison was able to state that the Vodafone mobile phone network was growing at a satisfactory rate and that it now had over 550,000 subscribers to the network. Sir Ernie estimated that this figure was growing at a net rate of around 200,000 subscribers a year. Chief executive Gerry Whent confirmed that the churn rate – the number of new connections and disconnections as a proportion of total connections – had increased to 18%, but within this figure two factors had contributed at least 3%: more people were upgrading their existing equipment, which implied both disconnection and reconnection, while lower equipment prices earlier in the year had induced users on to the network who were either unable or unwilling to pay when the bill came, resulting in disconnection. Average revenue per subscriber was put at UKP800 a year, with an average of UKP600 being spent on each subscriber in the year; including a one-time incentive payment to the customer of UKP170, this meant that over a period of a few years, Racal could reckon on a profit margin of around 10% for the the average customer. Orbitel, in which Racal has a 100% stake since Plessey relinquished its half share, is set to contribute around UKP50m in revenues for this year, and to have profitability of between 10% and 20%; Whent confirmed that Racal intended to keep its stake in Orbitel at the 100% level. As for the handful of other businesses owned by the company, Sir Ernie was most impressed by the performance of Vodata, while Vodapage had also now moved into profit; Vodac, on the other hand, continued to be a loss-maker because of equipment costs, but Whent added that this should be the last year of losses. For the future, Racal confirmed that it was pleased at the news that CT2 and related technology had been moved off the CoCom list, and that it was actively looking to Eastern Europe for business. At home, Whent estimated that from 1992 Racal would be spending around UKP75m a year on setting up a service based on the Personal Communications Network concept. The results pushed Racal Telecom’s share price back up to 365 pence, from which it had fallen off 3 pence at the close trading on Tuesday.

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