21/05/2003
MM02 blames £10.2bn loss on 3G 'overpayment'
Mobile phone company MM02 has revealed a massive year-end loss of £10.2 billion.
The mobile communications operator blames the majority of the losses on huge overpayments for third-generation mobile phone licences.
MM02 has been forced to revalue its overall assets in a £9.6 billion write-down conceding that the exceptional one-off cost of 3G licences has substantially contributed to the bulk of the deficit.
At the height of the telecoms boom, the 3G licences were bought at what is now widely acknowledged were wildly overvalued sums. The problems were compounded as the value of telecoms assets later plummeted in continuing difficult trading conditions on the world stock markets.
Three years ago MM02, formerly BT Cellnet, paid £4 billion for the 3G licences auctioned by the UK government. However, pressures on the telecom industry, ironically much of which is now attributed to the inflated price paid for the 3G licences, led to billions being wiped off the values of many telecom companies’ assets as the sector value realigned.
While the market for the sophisticated 3G phones is expected to materialise, it is anticipated that this will take place over a much longer timescale than was originally envisaged when the licences were purchased.
MM02 insist that the underlying mobile communications business remains strong.
David Varney, Chairman of mmO2 plc, said: "In these year-end results, the size of the exceptional charges we have taken has masked the strong underlying performance delivered in our first full year as an independent company. However this impairment enables us to go forward with a balance sheet that reflects realistic assumptions about the potential of our business to grow, and to deliver attractive returns for shareholders.”
On the positive side, turnover for MM02 for the year-end in March 2003 was £4.87 billion, up 14% on the £4.28 billion in 2002.
The loss made by MM02 before exceptional items that included the 3G licences was reduced from £337 million in 2002 to £104 million in 2003.
(SP)
The mobile communications operator blames the majority of the losses on huge overpayments for third-generation mobile phone licences.
MM02 has been forced to revalue its overall assets in a £9.6 billion write-down conceding that the exceptional one-off cost of 3G licences has substantially contributed to the bulk of the deficit.
At the height of the telecoms boom, the 3G licences were bought at what is now widely acknowledged were wildly overvalued sums. The problems were compounded as the value of telecoms assets later plummeted in continuing difficult trading conditions on the world stock markets.
Three years ago MM02, formerly BT Cellnet, paid £4 billion for the 3G licences auctioned by the UK government. However, pressures on the telecom industry, ironically much of which is now attributed to the inflated price paid for the 3G licences, led to billions being wiped off the values of many telecom companies’ assets as the sector value realigned.
While the market for the sophisticated 3G phones is expected to materialise, it is anticipated that this will take place over a much longer timescale than was originally envisaged when the licences were purchased.
MM02 insist that the underlying mobile communications business remains strong.
David Varney, Chairman of mmO2 plc, said: "In these year-end results, the size of the exceptional charges we have taken has masked the strong underlying performance delivered in our first full year as an independent company. However this impairment enables us to go forward with a balance sheet that reflects realistic assumptions about the potential of our business to grow, and to deliver attractive returns for shareholders.”
On the positive side, turnover for MM02 for the year-end in March 2003 was £4.87 billion, up 14% on the £4.28 billion in 2002.
The loss made by MM02 before exceptional items that included the 3G licences was reduced from £337 million in 2002 to £104 million in 2003.
(SP)
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