Viag eyes 3G partners

Viag Interkom, the German mobile phone arm of British Telecommunications, on Wednesday said it was close to reaching co-operation deals with competitors to share the cost of building its third generation network in the country.

There is increasing concern that revenues from 3G, or UMTS, services will not allow the six winners of last year's German spectrum auction to recoup their investment in licences and infrastructure.

Deutsche Telekom's T-Mobile arm, which faces lower infrastructure expenditure than new entrants as it is building on its comprehensive old-generation network, already has a national roaming agreement with Viag Interkom and is considering extending it to UMTS.

Yet it has said it would not consider joint network-building projects nor network-sharing partnerships in densely populated or commercially strategic areas.

Mobilcom, one of the new entrants, said in February that it was exploring "all options" to cut the cost of its infrastructure. Group 3G, a joint venture between Finland's Sonera and Spain's Telefonica that has yet to set up a business in Germany, is also understood to be investigating link-ups with rivals.

However, all operators face possible opposition from RegTP, the German telecoms regulator, in their attempts to link-up as the conditions attached to their licences imposes each to build their own network.

The costs of a German 3G network is estimated at up to E8bn ($7.2bn) - roughly the price of a German licence - and analysts believe operators could save up to 20 per cent of this by joining forces in infrastructure work.

Depending on the attitude of the regulator, the scope for co-operation on infrastructure between operators could range from the sharing of antennas to the establishment of joint operating companies to build and maintain the networks.

Viag Interkom, which plans to introduce UMTS services in January 2003, said another option would be to rent capacity on its network to fixed line operators seeking to offer their customers limited mobile services.

Debitel, the only bidder not to have been awarded a licence at the German auction last August, has said it was in advanced talks with Mannesmann, Germany's largest mobile operator, in leasing some capacity on the latter's German network.