Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: brational who wrote (19172)	2/19/2002 5:46:14 PM
From: Dennis Roth	Read Replies (1) \| Respond to of 196444

France Telecom's Mobilcom risk cap may herald exit from German UMTS market library.northernlight.com ------- It's getting ugly over there. DPR ------- PARIS (AFX) - France Telecom's decision to announce an estimate of a maximum exposure to Mobilcom AG of 5-6 bln eur is an attempt to reassure the market by naming a one-off, worst-case figure and may signal an imminent withdrawal from the German UMTS market, analysts said. The figure "roughly" equates to the enterprise value for the 72 pct of Mobilcom Orange does not already own, that is net debt of 7 bln eur weighed against the nominal market value, around 1 bln eur, according to Williams de Broe analyst Morten Singleton. Singleton noted that this ceiling does not allow for the capital expenditure required to roll out Mobilcom's UMTS network after assuming control if Mobilcom chairman Gerhard Schmid carries out his threat to exercise his put option. Singleton cited Orange as saying Schmid's total holding in Mobilcom is 36 pct and that the put option represents 33 pct of all shares, which would leave Schmid with 3 pct and Orange with 51 pct, forcing it to make an offer to buy out minorities and fully consolidate the debt. France Telecom would prefer to avoid this weighing on Orange's share price by taking a portion of Mobilcom itself. He said France Telecom's decision to name a figure is part of the ongoing "brinksmanship" between the two companies and aims at forcing Schmid to accept lower funding levels for his UMTS projects. By outlining the one-off hit it would have to swallow if Schmid carries out his threat to exercise his put option, forcing France Telecom to shoulder Mobilcom debt through its Orange unit, the company is trying to show the market the cost of taking control of the Mobilcom issue, he said. One possible conclusion could be a complete withdrawal of France Telecom and Orange from the German UMTS market. "Mobilcom shares have a market value of 1 bln eur, but in our view are virtually worthless", he said. The German mobile market is the "graveyard of Europe", he said, adding that in order to succeed, an outside operator would need a partnership with an incumbent GSM operator rather than a "greenfield" operator like Mobilcom where total investment costs could rise well beyond the short-term investment costs under dispute. The 10 bln figure Schmid is cited as demanding for the roll-out of Mobilcom's UMTS operations would only get the system "up and running, no more", he said. Buying out minorities and closing Mobilcom is "one logical outcome" for France Telecom and this figure would be about right, but the company needs to "come clean" and reveal the exact nature of its obligations to Mobilcom in the public domain, Singleton said. mrg/an/shw NNN Copyright AFX 2002, All Rights Reserved.