Bermuda Digital Communications, the owner of Cellular One, dealt a harsh blow to BTC Mobility this week by buying its biggest dealership, the Cellular Centre on Church Street.

The business was purchased from Dave Cardell, who also owns Phones Plus and the PageOne paging network.

When it re-opens next Monday after a week of refurbishment, the re-branded shop will sell mobile phones, accessories and Cellular One calling packages, exclusively. The transaction leaves BTC with only one dealership of any size or prominence in Hamilton, Telecom, which will itself become a competitor when it launches a mobile service of its own later this summer.

An industry insider said the number of activations on BTC's network could decline as a result of the sale. He expected the company might need to adopt Cellular One's direct sales approach and set up a shop of its own.

"But then if they open up on their own, they will be competing with the dealer," he said. "The dealers might not appreciate that."

The alternative is to enter into a joint venture with an existing dealer, whereby the dealer would move to a busier location to ensure proper exposure for BTC's services.

BTC Mobility's general manager, Stanley Wright, declined to comment on the situation.

Audio Visual Electronics, Island Satellite and Unlimited Supplies are BTC's other authorised dealers. Two operate in or near Hamilton; the other does business in Somerset.

As it waits to activate its network, Telecom continues to sell phones with BTC plans, even though BTC stopped advertising them as a dealer earlier this year, beginning in the Yellow Pages.

"We don't mind activating anyone that comes into our shop," said Firoz Kassam, Telecom's vice president of marketing and business development.

Although there have been no discussions between Telecom and BTC, Mr. Kassam said the company would remain a dealership if BTC allows it.

But if that happens, BTC will need to modify Telecom's dealership contract which currently prohibits competition between the two companies. On Monday, Mr. Wright said his company had not yet decided what it would do with Telecom once its mobile service launches. But as companies scramble for subscribers in a market with 33 percent penetration already, BTC may have no choice but to stick with a competitor which will no doubt push customers toward its own plans.

For Cellular One, the purchase of the Cellular Centre was one of necessity as its 1,500-square-foot Reid Street outlet became increasingly crowded with new customers signing up for service and existing customers paying their bills. The presence on Church Street will give the carrier an additional 1,200 feet of space.

"We are growing so rapidly that we needed additional retail space," said Bermuda Digital Communications CEO Kurt Eve. The company began operations two years ago yesterday, and between December, 1999 and December, 2000, its subscriber base doubled.

The purchase is part of a larger expansion strategy for Cellular One, although Mr. Eve would not provide details of the company's plans.

"The Cellular Centre is a very highly-regarded store with a great reputation and it seemed to fit in with our plans," he said.

Those plans include direct distribution of phones to customers, rather than the dealership approach adopted by BTC.

"Customers are in our store, talking to us about what they like and what they don't like," Mr. Eve said.

Although the terms of the deal were not disclosed, Mr. Eve said Bermuda Digital Communications purchased the Cellular Centre's store furniture, cellular inventory and goodwill.

The store's four full-time and two part-time employees were offered positions with Cellular One, but Mr. Eve would only say that some had accepted the positions while others had turned them down.

Even though Cellular One will abandon the Cellular Centre's name, Mr. Eve (along with the industry insider) is confident that the store won't loose any potential customers because it will represent a different carrier.

"People associate that store with quality cellular service, and that will continue under our ownership," Mr. Eve said.

But for Mr. Cardell, the former owner, the dealership business was tough.

"We found increasingly that we're selling a lot of phones but not making any money," he said.

Business picked up substantially, he recalled, when BTC introduced the digital MAX service in 1999, and phones were available for $100 when they would normally retail for hundreds more.

But Mr. Cardell said that the promotion put a lot of phones in the market and "killed it".

He will continue his other retail operation in the Church Street Mall, Phones Plus, which sells phones, fax machines and the PageOne services previously offered through the Cellular Centre.