mmO2 Announces Key Partners to Create a Pan-European Mobile Data Highway

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Wireless Developer Network - Daily News

mmO2 Announces Key Partners to Create a Pan-European Mobile Data Highway

NEW YORK, Apr 16, 2002 - mmO2 today unveiled two major initiatives in a move to become the leading provider of advanced mobile data services and products to customers in Western Europe.

The announcement follows a six-month review by mmO2 of its network architecture and the suppliers it uses across all its territories, including the UK, Germany, Ireland and the Netherlands.

As a result, mmO2 will build a seamless pan-European broadband mobile data highway to support the development of advanced multimedia services and their rapid launch across mmO2's businesses simultaneously. In a separate announcement, mmO2 has signed a letter of intent with Ericsson aimed at outsourcing its mobile network operations in the Netherlands (see news release PR0222).

mmO2 will consolidate all its existing supply contracts and replace them with new strategic partnerships. Nortel Networks and Nokia will become the principal suppliers of the broadband mobile data network. These partnership arrangements represent a new and innovative approach to ensure that a high quality, flexible network is delivered in a cost-effective manner. This involves the use of e-commerce technology and a commitment to work closely to drive down costs for mmO2 and the suppliers.

Customers will benefit from improved quality of service across the entire network, innovative pricing packages and enhanced mobile data roaming across Europe. mmO2 will also be able provide a new range of `always on', fast, multimedia and location-based services such as m-commerce, gaming, music, advanced messaging with photos and video clips as well as intranet and corporate e-mail services for executives on the move. These services will be accessible from an increasingly content-rich range of GPRS handheld devices such as the O2 xda.

Peter Erskine, chief executive officer, mmO2, said: "This is a highly significant development for mmO2, its customers, shareholders and strategic partners. It will help us reduce capital expenditure, increase GPRS revenue, reduce time to market of new data products and services and improve network quality of service.

"It supports our drive towards the creation of future mobile communications in Western Europe and underlines the benefits of our strategy and having 100 per cent ownership of all our businesses."

This new network is the first manifestation of mmO2's `do it once' approach to its operations. There are many other benefits including:

-- A seamless core GPRS (2.5G) mobile data network in all mmO2's territories and a common, group-wide network management system.

-- The ability to rapidly deploy a third generation (3G) mobile network and services at the appropriate time.

-- Reducing time to market by allowing new services and products developed anywhere in the Group to be deployed group-wide with minimal delay and effort.

-- Dramatic economies of scale including a 22 per cent cost saving - estimated at EUR 600 million over five years - to mmO2 on network expenditure relating to its 2G, 2.5G and 3G networks. mmO2 is now focusing on achieving capital expenditure efficiencies in other areas, including site acquisition, civil engineering as well as other non-equipment spend.

-- Minimising transition costs and environmental impact by maximising the use of existing equipment, including the re-deployment of equipment within the Group.

-- Maintaining a flexible approach to possible outsourcing or managed service initiatives similar to the one in the Netherlands.

-- The ability to support the existing 3G network sharing agreements in the UK, Germany and the Netherlands.

Erskine added: "We were the first mobile operator to launch GPRS networks and a working 3G network in Europe. This year, the company will focus on accelerating the uptake of GPRS services aimed at both business and consumer markets. Today's announcement is another large step along the path to the introduction of 3G services and building the proportion of our data service revenues from 12 per cent to more than 25 per cent over the next three years.

"We will be re-writing the rules of mobile data when we launch our 3G service and require the best available partners, who share our commitment and vision of what 3G can bring our customers. We were particularly impressed by the commitment of Nortel Networks, Nokia and Ericsson to deliver quickly and to work in a very collaborative way with us."

The total equipment spend on these arrangements, including the deal with Ericsson, is EUR 2.2 billion. Nortel Networks will supply mmO2 with a seamless, compatible GPRS network across all mmO2's territories. It will also supply the 3G core network infrastructure in the UK, Germany and Ireland (subject to licence), and a minimum of 30 per cent of the 3G radio equipment (base stations). Nokia will provide a minimum of 30 per cent of the 3G radio equipment as well as retaining all its existing 2G radio equipment business (currently around 70 per cent of the total) - with the opportunity of increasing this percentage.

Both vendors will be invited to compete for the remaining 40 per cent of 3G radio equipment. In both cases mmO2 will retain complete control of the 3G network roll out which will be driven by customer and market demand.

As part of the planned outsourcing agreement in the Netherlands, Ericsson will supply the in-country 3G core network and radio equipment.

mmO2 has 100% ownership of mobile network operators in four countries: the UK (BT Cellnet), Germany (Viag Interkom), the Netherlands (Telfort Mobiel), and Ireland (Digifone). Additionally it has operations on the Isle of Man (Manx Telecom) and a leading mobile internet portal business, Genie.

mmO2 was the first company in the world to launch and rollout a commercial GPRS (or 2.5G) network and has secured third generation mobile telephony ("3G") licences in the UK, the Netherlands, and Germany. mmO2 has also applied for a 3G licence in Ireland.

mmO2 has approximately 17.25 million customers and some 15,000 employees, with revenues for the year ended 31 March 2001 of (pound)3.2 billion. Data represented 12.8% of total service revenues in the quarter ending December 31, 2001.

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