Regulator refuses MobilCom's second attempt at 3G refund

7 Aug 2003

German regulator Regulierungsbehörde für Telekommunikation und Post (RegTP) yesterday dismissed claims by struggling cellco MobilCom [Berlin: MOBG] for the refund of part of a multi-billion euro fee paid for its third-generation (3G) licence, should the operator hand back the 20-year concession. MobilCom was one of six operators to acquire a 3G licence in August 2000, paying around EUR7.6 billion. It originally planned to launch 3G services commercially to 20 German cities by Autumn 2002, but became embroiled in a conflict with its partner France Télécom (FT) over the pair’s financial obligations regarding the network’s rollout costs. As a result of the feud, the launch of MobilCom’s GPRS service, originally planned for February 2002, was cancelled and it began offering rival E-Plus’ mobile internet service, i-mode, in April 2002. Two months later FT issued a notice to MobilCom terminating their cooperation framework agreement formed in March 2000, when it bought a 28.5% stake in the cellco; later that month MobilCom chief executive Gerhard Schmid was removed from his position and FT reached an agreement with 17 banks to assume 90% of MobilCom’s EUR4.7 billion debt. In November the two finally reached an agreement on terminating their UMTS involvement, leading MobilCom to withdraw from the 3G market.

E-Plus and O2 Germany bid for MobilCom’s 3G assets in March 2003 and E-Plus emerged as the winner in May, having agreed to pay EUR20 million for its 3,723 UMTS sites. Without the network infrastructure MobilCom cannot fulfil its licence stipulation to make 3G available to 25% of the country and will therefore have to hand its concession back. ‘There are no legal grounds for a partial refund if the licence is handed back before it runs out,’ RegTP president Matthias Kurth told Reuters. ‘But we have the right to revoke the licence if the requirements are not met.’ This latest rebuttal is the cellco’s second doomed attempt to recover the licence fee – the first took the form of a lawsuit filed shortly after the close of the auction, but was withdrawn after it became clear that it would stretch the indebted operator’s funds to breaking point.

The four remaining 3G licensees all claim that they will meet the rollout deadline of 2004. Although originally scheduled for 2003, the operators have since scaled back on their plans or announced delays as a result of technical issues, cost and disputes over network sharing.

Primetrica's Datafile of European Telecommunications