Sonera and Telefonica Switch Off in Germany

date: July 25, 2002 - source: BWCS

Sonera of Finland and Spain’s Telefonica are to close their mobile joint venture in Germany after just seven months in operation and are to scale back their plans for European 3G services. The German MVNO, Group 3G/Quam, launched GSM/GPRS services towards the end of last year and had attracted almost 200,000 customers by the end of June. In a statement accompanying Sonera’s first-half financial results, the telco’s CEO, Harri Koponen, said of Group 3G: “The company’s current business strategy is no longer feasible.”

Both Sonera and Telefonica have written down their investments in 3G licensees across Europe; the Finnish company has decided to write down €4.3 billion for its UMTS investments in Germany and Italy, where it holds a stake in Ipse2000, while its Spanish partner has made extraordinary provisions of €4.8 billion on its cellular operations in Germany, Italy, Austria and Switzerland. Telefonica says all decisions regarding UMTS in these four countries will be postponed “until there is a significant improvement in the technological and market conditions”.

The operators had high hopes for their pan-European 3G subsidiaries when they acquired licences in 2000 and 2001, but the delays in the development of UMTS technology – particularly handsets – and the current market conditions have forced them to redefine their strategies. However, both companies are more confident that they will meet with some success in their respective home markets. Sonera plans to launch commercial 3G services in Finland in September, despite a lack of handsets, while Telefonica says it has rolled out its next-generation networks to cover 21 Spanish cities as required under the terms of its 3G licence.

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