Mobilcom in talks to speed up 3G network

date: 17th January 2001, source: ft.com

Mobilcom, the German telecommunications group, said on Wednesday it had opened talks with Siemens, Nokia, and Alcatel to help speed up deployment of its third generation mobile network in Germany.

The company, which last year signed a E1.6bn ($1.49bn) letter of intent with Ericsson to provide it with its network, said it was investigating whether adding another provider could help it offer its services earlier than its self-imposed deadline of mid-2002.

"This does not affect our relationship with Ericsson, we are just looking whether it would be possible to come to the market faster," Mobilcom said on Wednesday.

The news comes amid increasing doubts about the ability of 3G equipment makers to complete the first networks before 2002. Mobilcom has said it wanted to be the first German operator to provide full services to German customers.

Neither T-Mobil, the German mobile arm of Deutsche Telekom, nor Mannesmann, the country's biggest mobile phone provider owned by Vodafone, have set deadlines for completing their networks although analysts do not expect them to be ready before the end of next year.

"It is possible that, by asking one manufacturer to provide the base stations, another the radio antennas, and a third the handsets, you would manage to finish faster than by using one provider," said one person familiar with the industry.

Some analysts, however, said Mobilcom could be trying to put pressure on Ericsson to improve the terms of its provisional contract.

While none of the companies has officially released the terms of the agreement, Mobilcom has privately said Ericsson had agreed to offer 300 per cent vendor financing - meaning that it would arrange the funding for more equipment than actually needed by Mobilcom.

But sources close to Ericsson say the company would provide less than 100 per cent financing. Mobilcom is understood to be the only operator to have received an offer of bridge financing from Ericsson. The Swedish company believes the collaboration could help it win other 3G contracts from France Telecom.

If another equipment supplier is also chosen by Mobilcom, Ericsson's vendor financing exposure is set to be reduced. The market welcomed this, with Ericsson shares nearly 8 per cent higher to SKr116.5 on Wednesday.

Siemens on Wednesday confirmed it was in talks with Mobilcom but said it would not sign a vendor-financed deal.

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