Italians move on payphones

The Italian-owned company Interphone became Britain's second public payphone operator yesterday, in direct competition with BT, after buying 1,500 former Mercury telephone sites.

The company said that the payphones would be installed by the end of the year and that 10,000 or more could be in place within five years.

Mercury, which never made any money from its payphone network, announced its withdrawal from the business in December. Interphone said: "We do not believe there has been any real choice in public payphones up to this time."

The new phones will be coin-operated, whereas Mercury's were entirely card-based, although Interphone will ultimately add a credit card facility as well. The investment in the network is expected to be about pounds 20m.

Carlo de Feo, president of the parent company, IPM Communications, said: "About 80 per cent of all payphone traffic is from calls made with coins. Mercury used only cards but coins are a strategic weapon in ensuring profitability."

The new phones will accept 5p coins as well as larger denominations, but the minimum charge will be 10p. Calls will be charged at a similar rate to BT - 10p units which vary in length according to the distance and the time of day. Interphone also said it will have a "fairer" coin return system which could save customers money.

About 150 payphones will be installed in London within the next few weeks and the roll-out will then shift to Scotland before spreading south towards the capital again. There will be two enclosed box designs and one hooded payphone. The kiosks will be wide enough to take wheelchairs and the actual telephones will be lower than in traditional payphones.

The move is a departure for IPM, which manufactures and installs payphones but until now has not been an operator. The company said Mercury's decision to withdraw was seen as an ideal opportunity to expand its core business. IPM had turnover of pounds 64m last year, of which Telecom Italia accounted for 81 per cent, falling to 49 per cent this year. Mr de Feo declined to give details of the transaction with Mercury, other than to say it will use its fibre optic network to carry calls.

BT, which now has 130,000 payphones, declined to comment on its new rival. The BT operation has been transformed in recent years, making a profit of pounds 74m in 1993/4 compared with a loss of pounds 46m in 1991.