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To: Keith Feral who wrote (114544)	2/27/2002 7:31:37 AM
From: hueyone	Respond to of 152472

Nortel's Deal With mmO2 to Build Its 3G Network Looks to Be Shaky By BEN DUMMETT and MARK HEINZL Staff Reporters of THE WALL STREET JOURNAL February 27, 2002 TORONTO -- Nortel Networks Corp. is looking to high-capacity wireless networks as a key driver for promised revenue growth later this year, but one of the company's big deals in this area appears to be up in the air. Amid much fanfare, Nortel, the big Brampton, Ontario, telecommunications-equipment maker, announced in May 2000 a five-year contract to be the main supplier for BT Cellnet's planned 3G wireless network, or Universal Mobile Telecommunications System, in the United Kingdom. A Nortel official later put a $780 million (897.4 million euro) value on the deal. Nortel said the win was evidence of its ability to gain market share from rivals in its bid to become a major equipment supplier for next-generation wireless networks. The contract, however, now appears to be less certain. "We are currently in discussions with a number of network-equipment vendors and expect to make a final decision this year" on which vendors will be chosen, said Simon Gordon, a spokesman for mmO2 PLC. "We're not ruling anyone in or out." Nortel's would-be partner in the wireless deal is now mmO2, which was spun out of BT Group PLC and owns wireless-network operators BT Cellnet, Viag Interkom in Germany, Telfort Mobiel in the Netherlands and Ireland's Digifone. Nortel could end up being a vendor for BT Cellnet, and indeed is still among the companies BT Cellnet is considering, a person familiar with the situation said. But the assertion by BT Cellnet appears somewhat at odds with Nortel's perspective on the situation. "Nortel Networks has a contract with mmO2, and we continue to work with them on the development of their 3G/UMTS network," said Nortel spokesman David Chamberlin. 3G wireless networks promise to allow high-speed data transfer to portable devices, for applications such as music and video. But the commercial outlook for such networks has increasingly come under question as many companies in the wireless-telecommunications industry struggle with high debt loads and less-than-expected demand for their data services. Nortel shares fell 10 cents to $5.12 as of 4 p.m. in New York Stock Exchange composite trading Tuesday, near a 52-week low of $4.76. The timing of BT Cellnet's 3G network construction is also unclear, the company said. "We will not start investing and building out networks until we're sure of a number of things," Mr. Gordon said. That includes the availability of dual-mode handsets in "significant numbers," expected by early-to-mid-2003, he said. Such handsets work with 3G networks, as well as with their preceding technology, 2.5G networks.