MMO2 Ups German Investment

mmO2 plc has revealed it is to build its own UMTS (Universal Mobile Telecommunications System) network in Germany, investing a further €1 billion (US$1.3 billion) to €1.5 billion ($2 billion) in 3G infrastructure over the next five years.

The European carrier has to date partnered with rival T-Mobile International AG in the German market in an effort to cut network rollout costs and hit 3G coverage targets (see EC OKs German 3G Net Sharing).

Now, mmO2 has decided to go it alone long-term, outlining its plans at the release of today’s impressive set of half-year financial results (see mmO2 Increases Revenues).

“We have decided without any debate that it is the right thing to invest in our own network,” CEO Peter Erskine told analysts. “We’ve had the fabulous insurance policy in the 3G roaming deal with T-Mobile, and that, of course, will carry on for a period of time... The investment is about another billion to a billion-and-a-half euros over five years and is broadly cash neutral because we will save quite a lot on operation costs.”

“During the five-year period from April 2004 O2 Germany is now expected to incur total capital expenditure in the range €3.0 [$3.9] to €3.5 billion [$4.6 billion],” adds a company statement.

Such an increase will play into the hands of mmO2’s equipment suppliers, Nokia Corp. (NYSE: NOK) and Nortel Networks Ltd. (NYSE/Toronto: NT).

UMTS is the 3G upgrade to the GSM standard, using a wideband-CDMA (W-CDMA) air interface on top of the GSM core network to increase voice capacity and boost data-transfer speeds to around the 200- to 300-kbit/s mark.

— Justin Springham, Senior Editor, Europe, Unstrung

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