MobilCom and FT divided over 3G

date: February 26, 2002

France Telecom has now said that the 3G plans presented by MobilCom in Germany need to be updated to include the changes in the market before any agreement can be made on them and FT will consider financing them. It has been alleged by FT that MobilCom's 3G plan fails to take into account network sharing and does not focus on keeping capex to a minimum. A spokesman for the French giant, which owns Orange, said: "All France Telecom's commitments to MobilCom depend on agreement on a business plan. We are currently discussing this."

Gerhard Schmid, chairman and 43 per cent shareholder of MobilCom, had said recently that France Telecom was pushing the German operator to limit its investment in 3G. "They want us to push investments from this year to next year and from next year to the year after next," Schmid said. It is thought that MobilCom wants to invest EUR1.4bn by 2003 into 3G, whilst France Telecom wants to invest as little as possible during 2002 and 2003. France Telecom and Orange said that under the deal with Schmid, they have to provide financing support, if required, to MobilCom for the rollout of its 3G operations. However, this obligation expires when MobilCom starts offering 3G services. But any such agreement must be approved by the FT board. The current shareholder arrangement held between FT and MobilCom will not force FT into such a situation, the French operator says in a statement.

Last week, relations between MobilCom and its backer, France Telecom, seem to have deteriorated following the announcement of MobilCom's 3G plans. A local newspaper has said that an unnamed France Telecom board member revealed that France Telecom has expressed doubts over the plans, saying that they are too expensive, unrealistic and irresponsible.

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