British Telecom raises concerns on 3G technology
By Dan Roberts and Lina Saigol in London
Published: September 12 2001 19:52 | Last Updated: September 12 2001 23:19
British Telecommunications is expected to make an unusually stark warning over the financial risks of third generation mobile phone technology when it demerges its mobile division later this year.
A draft copy of the listing particulars for mmO2 the new name for the mobile division, reveals that BT cannot guarantee that the technology will improve existing services.
The document, seen by the
Financial Times, also warns that the existing second generation network of radio masts is unlikely to be sufficient for 3G technology, while the construction of new masts could be hampered by tougher planning restrictions.
3G services are intended to provide faster internet access from mobile phones and a range of multimedia services.
On Wednesday BT said it could not comment on the confidential document, the final version of which is expected to be released in a few weeks.
It is also normal for the "Investment Considerations" section of a prospectus or listing particulars to contain information on worst-case scenarios drafted by the company's lawyers.
Nevertheless, BT's draft document is considerably more gloomy than the risk factors identified in February by Orange, the last big mobile phone company to float.
This highlights the increasing uncertainty in the industry, particularly concerning how quickly and effectively operators will be able to launch 3G services.
The BT document warns that UMTS - universal mobile telecommunications service - the 3G standard used across Europe, "may not prove superior to existing technologies". It points out that much essential development work remains to be completed. "The technology for the new UMTS services is not yet fully developed by the suppliers of the handsets and software," it says.
This risk could be compounded by a shortage of available equipment. "We expect to roll out our UMTS network at the same time as many of our competitors," adds the draft. "This, combined with the limited number of suppliers of UMTS network equipment, may extend the delivery times of such equipment, which may mean we cannot provide sufficient network capacity."
The 3G network is also
expected to require many more radio masts in addition to existing 2G equipment using the GSM technology standard.
"Placement of our existing GSM masts is unlikely to be optimal for UMTS services, which would necessitate the acquisition of additional sites," says the document.
"The development of our UMTS networks may be hindered by more stringent planning controls over the siting of masts, particularly in rural areas."
In contrast, Orange's February prospectus contained little more than a brief warning: "The group depends on a limited number of suppliers for its network equipment and services. The group's results of operations could be materially adversely affected if its suppliers fail to provide it with adequate equipment." |
