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mmO2 and T-Mobile may get approval to share cost

August 27, 2002

mmO2 and T-Mobile are expected to be given the go-ahead by Brussels to share the costs of building a 3G mobile network in the UK, saving the companies around €1bn (£640m).

The European Commission, which has already cleared a similar arrangement for the German market, is set to make a decision in the next few days.

The cost savings of jointly constructing 3G infrastructure in the two countries are put at €1.2bn for each company and are aimed at clawing back some of the vast sums spent on 3G licences at the peak of the telecoms boom. MmO2, formerly called BT Cellnet, and T-Mobile, previously One2One, paid £4bn apiece for 3G licences in the UK alone.

The pair announced plans to co-operate in the UK and Germany on 3G last year and submitted their agreement to the Brussels competition authorities. The initiative does not cover joint operating strategies such as the pricing of services, which would have faced much tougher regulatory scrutiny. In the past, Brussels has warned mobile companies against working too closely together in a sector where there are a very limited number of players.

A spokeswoman for the Commission said: "We will soon come to a preliminary conclusion regarding the UK market. We have looked at the co-operation agreement and [the level of] competition in the UK. Also we will look at consumer benefits. Will this mean quicker and cheaper 3G services?"

Industry sources said indications from the European Commission were favourable and the two companies were confident of approval.

 


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