| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
MmO2 to book $2.2 billion loss
AMSTERDAM, Netherlands (Reuters) -- British-based mobile operator mmO2 Plc said on Monday it would book a 1.4 billion pound ($2.2 billion) charge to ditch its struggling Dutch unit, selling it to an investment firm for 25 million euros. After having invested two billion euros in its Dutch unit over four years, mmO2 Chief Executive Peter Erskine said 25 million euros was ``the best price we got.'' Mmo2 had seen no way to make 02 Netherlands ``anything more than cash break-even.'' Analysts said it was a harsh reality check for everyone. "This shows you how much that business was originally seen as being worth...but the market is littered with precedents like this, where valuations have shrunk beyond all recognition in the space of two to three years,'' one London-based analyst said. "The amount of money they got is relatively irrelevant. What's more important is that they are exiting from a business that was burning cash.'' he added. Investors welcomed the news, sending shares in mm02, the smallest of Europe's five listed mobile phone companies, higher on hopes the company that has been dogged by merger speculation could make a fresh start. Mm02 shares, which have gained around 15 percent this year, rose by 3.5 percent to 51-3/4 pence by 0901 GMT. New owners Greenfield Capital Partners will "streamline'' O2 Netherlands, bring back the former name Telfort, and delay any investments in third-generation UMTS networks. Greenfield also owns Enertel, a major Dutch Internet Protocol data provider. Mm02, the British-based mobile phone company spun off from BT Group Plc in 2001, has wholly-owned businesses in Britain, Germany, Ireland and the Netherlands. Most competitive marketAnalysts say the sale was no surprise, as the Dutch unit operates in Europe's most competitive mobile phone market with five rivals battling for market share. O2 Netherlands has 1.25 million subscribers or 11 percent share of a market dominated by former state monopoly KPN and Britain's Vodafone. MmO2 said it planned to take a provision of around 1.4 billion pounds for the disposal, including taking on around 200 million euros of debt from the Dutch unit. The total provision will appear as an exceptional item in the results for the fiscal year to end-March. O2 Netherlands Chief Executive Ton aan de Stegge told reporters he did not plan any quick investment in an expensive UMTS network since the firm was not obliged under its licence to do so until 2007. The industry has spent 100 billion euros on third-generation mobile licences only to see new services delayed by software glitches and handset shortages. When asked when he was going to build a UMTS network, he told reporters: "Only if mobile data catches on will UMTS come into the picture. We are strong believers in further development of GSM, particularly EDGE.'' EDGE is super-charged GSM technology which can be used on current GSM mobile phone networks. Unlike UMTS which requires the construction of a entirely new network, EDGE is a simple software upgrade of the current GSM networks that allows much greater capacity and faster speed for data services such as e-mail and picture messaging and music clips. O2 Netherlands said it expected to show positive earnings before interest, tax, depreciation and amortisation (EBITDA) for the fiscal year which has ended on March 31. Germany in focusThe sale will refocus market attention on mmO2's other loss-making operation -- O2 Germany. Both the Dutch operation and O2 Germany, which has a market share of around 7.8 percent, have been under management review. But mmO2 says investor pressure to sell the smallest of Germany's four mobile operators has practically disappeared. O2 Germany has beaten financial targets and has extended a network sharing agreement with Germany's dominant mobile phone operator T-Mobile to cut costs as it rolls out a costly new-generation mobile phone network. But fresh speculation of a sale has been sparked over the past week after Dutch telecoms group KPN voiced interest in the German unit, which would help beef up its own German subsidiary E-Plus and help build a viable rival operation to dominant T-Mobile and Vodafone Group Plc in Germany. Both KPN and mmO2 insist there are no current talks on combining their German businesses or any other parts of their operations. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
