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Ex-Gizmondo team form ads-for-airtime phone firm

Xero Mobile applies Smart Adds approach

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Three ex-Gizmondo Europe executives have have emerged as the minds behind US-based virtual network operator Xero Mobile. The start-up's pitch: offer mobile phone users free airtime if they'll put up with adverts being pushed to their handsets.

Xero Mobile first started making headlines last month when the company's detail-free website went live. One blogger claimed at the time the company had won $300m in financing, much of it from Europe.

Today, the Financial Times said former Gizmodo CEO Carl Freer had been helping Xero Mobile raise money, according to company staff, though Freer himself said he has no direct involvement with the firm. Freer quit Gizmondo in October 2005 when it emerged fellow director Stefen Eriksson had a criminal past that had not been disclosed to the company's board. Freer was not accused of any wrongdoing.

Xero Mobile's business model matches that of Gizmondo Europe's Smart Adds approach in which the handheld consoles were offered at a lower price to punters willing to be sent sponsorship messages. How many ads Gizmondo actually sold remains open to question. Advertising sales were intended to subsidise the reduced console sales tag.

It's no surprise, then, to learn that Peter Lilley, head of Gizmondo's Smart Adds operation, is one of Xero Mobile's principals, according to the FT. So too is David Levett, once Gizmondo's chief software architect, and Rich Clayton, one of Gizmondo's producers in the US.

The company's prospectus reckons it will cost $92m to set up the service ahead of its launch, but it believes it can earn $1.8bn before tax, interest, depreciation and amortisation by the end of its third year of operation.

News of Xero Mobile's Gizmondo connection comes just weeks after former Gizmondo executive Stefan Eriksson totalled his $1m Ferrari Enzo in Malibu, California.

Early in February, Gizmondo Europe went into liquidation. ®

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