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To: jackmore who wrote (118748)	5/14/2002 7:28:42 AM
From: jackmore	Read Replies (1) \| Respond to of 152472

MobilCom losses deepen as France Telecom feud hits By Reuters staff 14 May 2002 German mobile operator posts wider net loss of E116m on lower revenue of E514.3m. Struggling German telecoms operator MobilCom AG on Tuesday posted much worse-than-expected first quarter results as a bitter feud with key shareholder France Telecom hit earnings and operations. MobilCom, locked in a dispute for months over funding and strategy with 28.5 percent shareholder France Telecom, said its net loss for the quarter widened to 116 million euros ($105.7 million) from 43.5 million a year earlier. A Reuters poll of 12 analysts put the group's first quarter net loss in a range between 115 million and 14 million at an average of 54 million. The results add to a dismal picture right across the European telecoms sector as mounting losses have added to the huge debt burdens built up through acquisitions and the costs of licences and networks for new generation mobile services. MobilCom's loss before interest, tax, depreciation and amortisation (EBITDA) including the costs of starting up its new third generation mobile phone network came in at 120.7 million euros compared with 34.8 million a year earlier. Revenues dropped to 514.3 million euros from 728.7 million. The group, Germany's fifth-largest telecoms operator, said the France Telecom dispute had cut profits by 90.3 million euros in the first quarter, mainly because of the need to set aside special items. MobilCom has been fighting with France Telecom for months after a wrangle flared up in February and boiled over into an acrimonious personal feud between Chief Executive Gerhard Schmid and the French operator. The dispute escalated to the point where France Telecom has been forced to come up with a plan to buy out Schmid's 40 percent stake, despite the headache it faces handling the German group's 5-6 billion euro debt pile. The French group is believed to be looking at a two-stage bid plan in which a consortium of banks would hold on to the stock, and make an offer to small shareholders, until France Telecom was strong enough to manage the debt burden itself. France Telecom, struggling with 61 billion euros of its own debt and wary of the threat of more crippling credit downgrades, cannot afford the cost of consolidating MobilCom's debt on its own strained balance sheet. MobilCom stock has dropped some 40 percent since early January but is up about a third since the start of April as investors have pinned their hopes on a bid from France Telecom or financial investors. totaltele.com