JANUARY 6, 2001
Mobile phone money
FORMULA 1 has enjoyed a large amount of money in recent years from mobile telephone companies which are keen to link their image with the fast, high-technology of Grand Prix racing. But the industry which many felt would replace tobacco as F1's biggest supporter in the years ahead could be running into a trouble. According to a report published last week by the Forrester Research Group predicts that the mobile phone industry is facing losses and a wave of mergers which will leave only a handful of big companies. Forrester is predicting that Vodafone, Deutsche Telecom's T-D1, Orange (France Telecom) and Cellnet (British Telecom) will survive but is not so sure about other big players such as Telecom Italia's TIM, Telefonica and Japan's DoCoMo.
The problems are expected to arise because the companies have spent too much money on acquiring licences for third generation mobile phones in the recent wave of auctions. With the market in Europe nearing saturation level revenues are not going to increase unless big companies take over the small players and even then the debts incurred are going to bite hard. The research suggests that profits will begin to fall in 2003 and most of the companies will be losing money by 2007. It suggests that the companies might not return to profit until 2013. In the circumstances it is going to be hard for the companies to justify big sponsorships in F1 although it is probable that the rush to find more customers around the world will lead to more backing from the big players in the short term.
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