Artistic licence

19 May 2003

Reports say the mobile operator’s accounts are about to catch up with the fact that the E8.5bn it spent on a German 3G licence was wasted. Don’t expect a wave of similar admissions from rivals. O2’s writedowns are being driven by a specific need to fix its structure.

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mmO2 is set to post a massive accounting loss by writing down the book value of its German thirdgeneration mobile licence in annual results due to be published on 21 May, say reports. The mobile operator has already said that it will take a £1.4bn writedown on its Dutch business, which it sold in April for a token E25m (£18m). It paid E430m (£300m) for its Dutch 3G licence.

Its German 3G licence was valued at E8.5bn (£6bn) on the balance sheet of its German subsidiary at the end of 2000, according to mmO2's listing particulars. O2 has undertaken to build out a 3G network in Germany in accordance with the licence conditions, although it has not fixed a date for the launch of services. In the UK, it has postponed the launch of 3G until the second half of 2004.

O2 has been in inconclusive talks with KPN of the Netherlands about a possible merger of O2 Germany with KPN's subsidiary EPlus.

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