All Change In German 3G Sector?

date: March 11, 2002 - source: BWCS

Germany’s nascent 3G industry is in a state of flux with predictions that one or more of the smaller licensees will be forced to merge or withdraw from the market. According to Reuters the Spanish telco Telefonica believes that only three out of the six licensed 3G operators in Germany can survive in the long-term. With two of these almost inevitably being owned by Germany’s dominant mobile operators T-Mobile and Vodafone Mannesmann, attention is turning to the four smaller 3G operators. Telefonica, which is the majority shareholder in UMTS licensee Group 3G, has also reaffirmed its own commitment to the German market, stating that it expects to own at least 50% of one of the three remaining 3G operators.

The Dutch operator KPN Mobile also looks set to remain involved in the German market with the announcement that the EC has cleared its acquisition of the 22.51% stake in E-Plus that it didn’t already own. US telco BellSouth has swapped its E-Plus shareholding for a 9.4% stake in KPN. E-Plus and Group 3G are cooperating in the rollout of their UMTS networks by sharing parts of their infrastructure in an effort to reduce costs.

Meanwhile following weeks of acrimonious relations there are now signs that MobilCom’s majority shareholder Gerhard Schmid and its foreign telco partner France Telecom could resolve their disagreements. According to weekend reports in the German newspaper Frankfurter Allgemeine Sonntagszeitung, Schmid is willing to scale back his ambitious 3G deployment plans in an effort to prevent France Telecom from withdrawing from MobilCom. The two sides are expected to announce a compromise plan before the presentation of MobilCom’s financial results next week.

While UK-based mmO2 has been keen to play up its controlling shareholdings in its European mobile businesses some analysts believe that its unprofitable Dutch (Telfort) and German (Viag Interkom) networks represent an unsustainable financial drain on the group’s operations.

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