Nortel Says Won't Become Bank to Win 3G Deals

Nortel Networks, the world's biggest telecoms equipment supplier, said on Thursday it was unlikely to offer credit to telecoms operators in return for lucrative European contracts for new-generation mobile networks.

Pascal Debon, the European, Middle East and Africa president of the Canadian-based giant, said he had talked with European cellphone groups such as Orange about network contracts -- but had no intention of turning "into a bank" to win them.

Orange has clinched a 3.45 billion euro ($3.06 billion) loan from its chosen suppliers -- Finnish handset heavyweight Nokia, Swedish network giant Ericsson and France's Alcatel -- in return for a 2.3 billion euro order for new French, German and British third generation (3G) networks.

Some analysts say building high speed new cellphone networks across western Europe will cost debt-laden mobile groups about 75 billion euros initially, fuelling speculation that network contracts are likely to depend on an element of vendor finance.

However Nortel, which last month issued its second major profit warning in six weeks as a U.S. economic slowdown takes its toll, insisted it would not be frozen out of the European 3G network market by a conservative funding strategy.

"We are not doing this sort of high level financing," he said in an interview. "We are not a bank...(But) a lot of deals are without financing."

Nortel has clinched around 2.17 billion euros of contracts to build high speed, third-generation UMTS (Universal Mobile Telecommunications System) networks in Europe from Britain's BT Cellnet, Spain's Airtel and Xfera, Germany's T-Mobile and France's Cegetel.

Debon said the company was working on other opportunities as well, noting that winning contracts was only half of the battle.

"We still have to see who is going to deliver (on time). The third generation game is very, very open," he said.

"I think at least three of us are leading the charge and... we'll have to wait until the end of 2002 or early 2003 to see who is where, depending on effective contracts and delivery."