OXFORD, United Kingdom-The potential for more intimate cooperation between cell-phone operators MmO2 and T-Mobile seems likely following the announcement that MmO2 has extended a third-generation (3G) network sharing agreement with the German operator.
Peter Erskine, MmO2’s chief executive officer (CEO), said the network-sharing and roaming deal would cost it just more than 200 million euros (US$217 million), which was substantially less than the estimated cost of around 500 million to 700 million euros (US$542 million to US$759 million) to build its own network. The company is required by the German telecom regulator to provide 3G coverage to 25 percent of the country’s population by the end of this year or lose its license. The agreements build on an earlier contract that gave MmO2 access to T-Mobile’s 3G network in all areas over a longer period.
Meanwhile, market rumors continue to circulate that T-Mobile is the only bidder for MmO2’s loss-making Dutch subsidiary, although the company insists that discussions are ongoing with other interested parties. If T-Mobile does conclude a deal to acquire the Dutch operation, analysts are speculating that MmO2 might want T-Mobile to merge their networks in Germany. MmO2 has stated that it remains open about its options in Germany and would review realistic offers.
Separately, MmO2 announced-better-than-expected financial results and increased average revenue per user (APRU) in the United Kingdom and Germany (see related “Europe” news). Also, the company was able to claim that revenue from short message service (SMS) traffic grew at its fastest rate, increasing by 19 percent over the previous quarter. Erskine said the group expects data as a proportion of service revenues to rise to 25 percent by the end of 2004 from its current 17.7 percent.
