‘3’ pledges to investigate Dubai grey

‘3’, a UK-based 3G telecoms operator owned by Hutchinson, has pledged to launch an investigation after a batch of its 3G handsets — originally intended for sale in the UK as part of ‘pay-as-you-go’ contracts — turned up for sale on Dubai’s Computer Street still in the original ‘3’ packaging.

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By  Alex Malouf Published  January 25, 2005

‘3’, a UK-based 3G telecoms operator owned by Hutchinson, has pledged to launch an investigation after a batch of its 3G handsets — originally intended for sale in the UK as part of ‘pay-as-you-go’ contracts — turned up for sale on Dubai’s Computer Street still sporting the original ‘3’ packaging. The devices, refurbished Motorola A835 video camera phones, are being advertised as new by a firm called ProX Computers and come with a price tag of US$400 each. ProX staff claim that the devices are 3G-enabled for the Middle East market, a claim that Motorola disputes. Both ‘3’ and phone manufacturer Motorola are advising customers against buying the imported devices. “We would advise consumers against purchasing these devices, as they have not been tested by the region’s service providers,” commented Patrick Mulligan, general manager, personal communications sector at Motorola MENA. “ Whoever is selling these products is making a killing, as its retail price in the UK is much lower.” ‘3’ sells Motorola A835s on a pay-as-you-go contract for only US$85 in UK. The operator has already begun an inquiry to find the source of the import. “At this stage we're investigating the origins of these handsets,” noted Edward Brewster, head of corporate communications at ‘3’. “As you know the run-up to Christmas is the busiest period of the year and electronic goods are often re-traded.” The handsets are available at low price points in the UK because operators are keen to get new 3G users signed up to their network. Any loss made on the up-front handset sale is hopefully recouped through network fees. While this policy used to be the preserve of fixed contracts that effectively locked customers in to the operator for a set period of time, 3G operators are also offering cheap prices for ‘pay-as-you-go’ users in their quest to boost customer numbers. “We manage our stock carefully and efficiently and we're not aware of any issue in Dubai. However we’ve advised our audit team to investigate. ‘3’ has rules in place with our retailers about selling our products in the appropriate way and as you'd expect we monitor that sales process by talking to distribution channels regularly,” Brewster added. Dubai-based industry insiders estimate that up to 70% of mobile phones purchased from authorised distribution channels in the UAE are actually re-exported to other destinations in the Europe, Middle East and Africa (EMEA) region. In addition, grey product originating from other markets in the world is often channelled through Dubai on its way to its final destination according to local distributors. The manager of the grey importer, ProX, boasted that he could supply Motorola A835 handsets for bulk orders at a hefty discount — an assertion that both ‘3’ and Motorola will be eager to prove false.

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