3G failures in Germany put pressure on Vodafone

Vodafone is likely to face pressure in the new year to writedown billions of euros from the value of its German business.

Early in 2004, the German telecom communications regulator is expected to confiscate two of the six licences to provide 3G services it sold three years ago for €50bn,as their owners, Mobilcom and Quam have pulled out.

The licences are expected to be sold on to the remaining four players for as little as €200m, fuelling concerns that Vodafone is valuing its German business too highly. .

Already two of the operators that have met the German regulator's demands to have 25% coverage of the country's population by January 2004 - MMO2 and E-Plus - have written down the cost of their licences.

According to industry insiders, news that the remaining licences owned by Quam and Mobilcom are worth far less than was paid three years ago will increase pressure on the remaining players, Vodafone and T-Mobile, to recognise their licences are overvalued also.

However, a spokesman for Vodafone said the company believes its German business as a whole is performing in line with its valuation on the books and will resist any writedowns of their licence.