mmO2 preps market for 3G writedowns
mm02's financial PR bunnies are softening up the press in advance of Wednesday's results in which the UK-owned network operator is expected to declare a massive loss.
Stories in the Sunday Times, FT and The Guardian all say that mmm02 will write down, the majority of its £9bn investment in 3G licences (to be precise, former parent BT footed the bill). At the same time, the company will take a massive hit on its lossmaking Dutch operation, valued in the books at £1.4bn, but sold last month for €25m. The twin write down will see mm02's asset value reduced by between £6bn and £9bn, according to which newspaper you read. Currently, mmO2's asset value is £18bn.
mmO2's 3G writedown is to be welcomed. It will be interesting to see if Vodafone, T-Mobile and Orange get realistic too.
Vodafone maybe could take the pain, but T-Mobile parent Deutsche Telekom and Orange parent France Telecom have battered enough balance sheets as it is without this additional headache. ®
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