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Bouygues to launch i-mode services and bid for 3G license

Europe turning to NTT DoCoMo

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ComputerWire: IT Industry Intelligence

French mobile operator Bouygues Telecom SA has signed up to become the fifth European licensee of the i-mode mobile internet technology owned by Japanese mobile operator NTT DoCoMo Inc.

The two companies announced that Bouygues will launch the service in France within 12 months. This underlies the increasing popularity of i-mode in Europe, at least among mobile operators, as a technology for offering content and services on 2.5 and 3G networks.

Dutch operator KPN mobile NV is due to launch i-mode services in the Netherlands this week, and has already launched i-mode in Germany through its subsidiary E-Plus. KPN will follow with a launch of i-mode by KPN Orange in Belgium in June. Last month, UK third-generation mobile operator Hutchison 3G UK announced that it planned a launch of i-mode service later this year, but refused to clarify details.

NTT DoCoMo president and CEO Keiji Tachikawa confirmed that the company is in negotiations with as yet unnamed mobile operators in Italy and Spain. This means that it would gain full coverage of the major Western European countries, excluding the smaller countries Ireland, Portugal, Austria and Switzerland.

These current licensees give DoCoMo a total potential subscriber base of 25 million, far short of the 32 million current subscribers to i-mode in Japan. As the services have yet to launch anywhere apart from Germany, it is hard to gauge the European reaction to i-mode, and whether the Japanese popularity can be emulated in Europe.

The French deal follows hard on the launch of m-mode, AT&T wireless Corp's version of the i-mode service launched in the US this week. DoCoMo will license the technology and intellectual property for the i-mode service for 10 years, which will enable Bouygues to run services over both a GPRS and UMTS network under the terms of the license agreement. However, this is conditional on Bouygues winning a third-generation mobile license.

Bouygues is France's third largest mobile operator, and with 6.6 million subscribers decided to pull out of the bidding for third-generation mobile licenses in January 2001, claiming it was far too expensive. But as the price of the two remaining unsold licenses has been slashed, Bouygues has finally stepped in. At the same time as making the i-mode announcement, it also confirmed that it will bid for a third-generation mobile license when the auction reopens on May 16.

The company suggested that the price is right at the 619m euros ($550.1m) now mandated by the French government, and the additional tax of 1% of 3G revenue. This is far cheaper that the 4.9bn euros ($4.4bn) that it could have paid in January 2001. But this probably leaves France without a fourth license holder, as no bidder has emerged, and the auction is less than a month away.

Even with the reduced price, Bouygues is going to have to raise more finance to pay for the license. To pay the government it plans to raise 800m euros ($711m), in a bond issue to its existing shareholders. This will have to be financed by its two shareholders, property group JC Decaux International SA and construction company Bouygues Group SA.

Bouygues Group will get hit the hardest as it owns 79.1% of Bouygues Telecom, the remainder is held by JC Decaux. The Bouygues Group will finance this with a bond issue of its own, raising between 750m euros ($666.6m) and 1bn euros ($888.8m) from the markets.

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