The move back into retail with 3G pits Tony Boyle against the big chains, writes Jamie Smyth.

After more than three decades immersed in the fast- growing telecoms industry, Mr Tony Boyle isn't intimidated by a challenge. In fact, the 51-year-old telecoms guru and founder of the Sigma Group seems to relish competing toe-to-toe against the biggest players in the industry.

Already operating in the mobile distribution and telecoms network markets, Mr Boyle recently turned Sigma's attention to developing antennae for third- generation networks, which are now being built across Europe.

And with Sigma generating revenues of almost €100 million every year, he has now decided to get back into retail just four years after selling the mobile phone chain "Person2Person" to Eircell for an estimated €25 million.

The move back into retail will pit Mr Boyle against the big retail chains operated by Vodafone and O2, and specialists such as Carphone Warehouse. But the Dubliner, who performed a management buyout at an Irish Motorola operation in 1991 to set up Sigma, is happy to buck the recent trend towards consolidation in the mobile retail space.

"We built Person2Person up from scratch to become the leading independent mobile phone retailer with 16 per cent market share when we sold it," says Mr Boyle, in a rare interview with The Irish Times. "Basically we want to do the same again."

Last Wed- nesday Mr Boyle cut the ribbon on his latest venture: a network of 18 retail shops dedicated to the mobile and fixed communications markets, which will shortly be rebranded 3G.

The leaseholds to the shops were bought from Eircom for an estimated €3.5 million, and this weekend 3G's managers will take control of the new retail chain.

"We have the track record, the team and the most experienced and proven chief executive in the market [Ms Josephine Conaghan\]\," says Mr Boyle. "We see this acquisition as an exciting opportunity given our ability to deliver what people want."

The majority shareholders are Mr Boyle and his long-term Sigma partner, Mr Michael McGinley - father of the golfer Paul McGinley. They are joined by Ms Conaghan, formerly managing director of Person2Person.

The shops have been set up and will be kept completely separate from the Sigma Group because of the different shareholding structure and the need for independence, according to Mr Boyle. Customers of Sigma will be competitors to 3G and so establishing a distance between the two companies is a positive factor, he says.

Under the terms of the acquisition, 3G signed an exclusive three-year contract with Eircom to become a Connect Centre for its customers. This will enable Eircom customers to pay their phone bills at shops and get demonstrations of new products, such as its i-stream DSL service.

But 3G has negotiated supply deals with mobile phone firms Meteor and O2, and will offer advice to consumers on the latest generation of mobile handsets. It also plans to offer a range of communications and gaming products as the fixed-line and mobile sectors converge, says Mr Boyle. "The market is becoming more sophisticated with broadband services and new camera phones, and the introduction of full mobile number portability will create a lot of momentum."

People need expert advice for the products and the large scale of the former Eircom stores - which all measure more than 1,000 sq ft - will enable demonstrations, according to Mr Boyle.

It comes as little surprise that Vodafone has chosen not to sign a supply deal with 3G. The company has effectively blocked 3G's entry into the retail market since last September by exercising a non-compete clause that it negotiated when it bought Person2Person from Sigma back in 1998.

This non-compete clause prevented Mr Boyle from getting back into mobile retailing for four years after selling an initial stake in Person2Person in 1998. This was later extended by a further year after the final instalment was paid to Sigma in 2002.

Mr Boyle refuses to talk about the legal discussions which the firm has had with Vodafone in recent months but confirms that the clause finally ran out this week. Relations between Vodafone and Sigma were strained following the phone giant's decision to cancel a €40 million distribution contract with Sigma Telecom for its Ready to Go phones.

The cancellation of this contract blew a hole in Sigma Telecom's revenues during 2002. But turnover should return to 2001 levels this year, says Mr Boyle.

The most recently published results for Sigma Telecom Limited - the biggest subsidiary in the Sigma Group - show it made revenue of €103 million in the year to the end of December 2001, down from €108 million in 2000. Pre-tax profit made by the firm in 2001 was €824,000, down from €1.7 million in the previous year.

Mr Boyle believes a new retail distribution deal struck with the third mobile operator Meteor should help boost turnover at the firm. Under this deal, Meteor has outsourced the distribution of its mobile phones and accessories to Sigma for about 100 retail outlets.

Sigma Group's other subsidiaries have also had a difficult two years due to the downturn in the market and several unforeseen occurrences. Sigma Wireless Technologies Limited, which develops base station antennae for mobile phone networks, recorded a pre-tax loss of €1.9 million during 2001, compared with a profit of €290,000 a year earlier.

A footnote in its financial accounts show that the foot-and- mouth outbreak in Britain brought to a standstill all network deployments. The delay in the deployment of third-generation telecoms networks has also affected the company, it adds.

Yet Mr Boyle says tight cost control at the firm has placed it well for an expected upturn in the global telecoms market. During the prolonged downturn, the Sigma Group has put millions into research and development activity to perfect a new third-generation mobile antennae that can be serviced remotely.

Advanced talks between Sigma and a number of European mobile phone companies are continuing, says Mr Boyle, who is hopeful of signing a deal shortly.

Mr Boyle, who entered the telecoms industry with the Dutch firm Philips direct from O'Connell's School, has also been in the news lately in relation to the Moriarty tribunal. Sigma was part of a consortium with the US firm Motorola, which failed to win competition for the second mobile phone licence. This consortium recently commenced a High Court legal action against the State and others for damages.

Mr Boyle refuses to discuss these legal issues, preferring to talk about the 3G retail business. "What we are doing is building a successful business and providing employment and growth," he says. "3G will be the only locally owned national retail chain in the sector... This will give us a competitive advantage as we will be better able to tailor service to Irish customers."

Judging by Mr Boyle's persistence in getting back into retail against the wishes of Vodafone, it seems unlikely that Sigma will shy away from pursuing a legal case against the State. Following the conclusion of the Moriarty tribunal, it wouldn't be surprising to see Sigma in a subsequent toe-to-toe encounter with the State's lawyers in the courts.

By then, Mr Boyle will be hoping his network of 3G shops will be netting him a tidy profit.