Oniway to close down 3G operation
December 4, 2002
Portuguese 3G license holder Oniway will close down its operation
after shareholders agreed to sell off its assets to domestic rivals
for €160m. Electricidade de Portugal's (EDP), 68% shareholder, decision
to shutdown the startup 3G unit reflects the uncertain outlook for
3G services.
However, minority stakeholder Telenor of Norway (20%) said it along
with Spanish power company Iberdrola (8%) will oppose the deal.
Analysts forecast that Oniway would have to spend up to €800m over
four years to break into the competitive Portuguese market, where
85% of the population already have a mobile phone.
EDP said financial, commercial and technical factors - unforeseen
when it obtained its 3G license - have influenced its decision.
"The freeze on starting up direct UMTS service held risks that
were too great for us to take on and would have had the disadvantage
of not letting us sell assets," said Chief Financial Officer Rui
Horta e Costa.
Oniway was due to launch GPRS services within a few weeks, ahead
of launching 3G operations. Investments in Oniway totalled €484
million, EDP said. Another €30 million were estimated for extra
operating costs until the company is closed in January.
The remaining three operators - Vodafone Telecel, Portugal Telecom's
TMN and Optimus - have agreed to divide most of Oniway's assets
between them, paying about €50m each.
Telecel has also agreed to purchase all of Oniway's shares, which
gives it the right to use the operator's tax credits in 2003 and
2004.
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