MmO2 denies German pull-out

THE mobile phone off-shoot of BT, mmO2, is denying reports it is considering pulling out of Germany, although it refuses to rule out the option.

The business, which saw grey market trading in its shares start today, operates BT Cellnet in the UK alongside other brands across Europe.

Analysts have been lukewarm about the company, formerly BT Wireless, because of its lack of market share in the key market of Germany where it runs Viag Interkom, soon to be renamed O2 along with its other mobile phone brands in the Netherlands (Telfort) and Ireland (Digifone).

Viag lies in third place in Germany behind Vodafone and Deutsche Telekom with just 7% of all customers. MmO2 says it can increase that market share to 12% within five years.

A spokesman said: ?We are committed to Germany and we‘re already seeing green shoots of recovery. We believe we‘ve got the right strategy in place.

?If things don‘t go to plan then it‘s a hypothetical question as to what you do, but you‘ve got two choices – you stick with it or you bail out. That‘s business.‘

MmO2 yesterday posted profits before one-off costs of £71m. This compares with a loss of £13m in the same period a year ago but is down nearly 40% on the preceding quarter.

When it was part of BT, MmO2, which has 16.5m customers, paid £10bn for licences to run third generation phones in the UK, Netherlands and Germany.

Lawrence Peterman of broker Eden Group said: ?It would surprise me if they did pull out because they have committed so much money. It would be a massive write-off.‘

MmO2 grey market shares were trading at 76p by mid-morning while BT Group was valued at 260p. The combined BT shares were up 10p at 335p. Official trading begins on 19 November.