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Tuesday, 20 March, 2001, 09:20 GMT
EU 'to tackle 3G debt'
man on mobile
European telecoms operators facing a mountain of debt over the purchase of third-generation (3G) mobile phone licences could be thrown a lifeline by the European Commission, it is reported.

The Financial Times newspaper says that the European Commission wants EU governments to consider deferring the collection of payments for the licences, or to allow telecoms operators to share infrastructure.

The Commission is due to set out the options for improving business conditions in the sector in a discussion paper on Tuesday.

Third-generation, or UMTS (Universal Mobile Telecommunications Service), technology will allow operators to offer new services including video, networked games and faster internet access from mobile phones.

3G profitability concern

Many mobile operators ran up huge debts last year, buying the licences that will allow mobile phones to become multi-media devices.

Governments in the UK and Germany, which sold the licences at auction, generated billions of dollars more than they expected.

But the huge amounts operators paid in those auctions sparked investor concerns about the business model for 3G.

Many analysts said the heavy licence costs would delay the introduction and profitability of 3G services.

Share price falls

Subsequent 3G licence sales across Europe mostly fell flat, with either few bidders coming forward or licences sold at much reduced prices.

Share prices of telecoms firms - both operators, handset makers and infrastructure suppliers - also fell heavily, receiving an additional push from general investor flight from "new economy" stocks.

The FT said the Commission's paper is due to be discussed at the EU's summit in Stockholm this week.

The Commission would then meet operators, national regulators and equipment suppliers to try to form some policy recommendations, the paper reported.

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