This sums up much of my thinking - I hold a few and swing trade a few and even trade intraday sometimes ......

I think there is a lot of slack that management can cut out of the costs and would also anticipate sector consolidation ..... good value currently and have been holding their own in a falling market. Lot of US interest.

ains


Edited by Dominic White
(Filed: 08/02/2003)


Texting makes MmO2 sexy but it's also risky

More and more Britons are discovering the joys of textual intercourse. In the month of December, we fired off more than 50m mobile messages a day, and next Friday (that's Valentine's Day, folks, in case you'd forgotten) we'll send considerably more than that.



It emerged this week that the chief beneficiary of this craze is MmO2 . BT's former mobile phone division revealed that it gets a higher proportion of revenues from texting than any of the other three operators.

Revenue from messaging grew at its fastest rate ever in the last quarter, up 19pc, and data services as a proportion of MmO2 's revenue rose to 17.7pc from 15.6pc.

More good news was the rise in MmO2 's average revenues per customer. ARPUs, as nerdy analysts like to dub them, grew by 5pc to 243 in the UK and by 9pc in Germany to 212.

MmO2 now has 19.1m subscribers and in Britain it may be the smallest player, with 11.9m users, but it is growing faster than its rivals - testament to the success of its rebranding from BT Cellnet.

Only 114,000 of its 503,000 new UK subscribers were higher-spending contract customers, but MmO2 claims its pre-pay customers have started spending more than before.

Customer growth in Germany, which continues to be dominated by T-Mobile and Vodafone, is less impressive and the MmO2 share price ascribes little or no value to this part of the business.

That seems unfair, given the fact that the group has attracted higher-spending customers and has made a decent fist of turning the operation around. An eventual sale or merger is almost as inevitable as a disposal of the Dutch unit, which is losing customers.

MmO2 's larger rival Vodafone is trading on a free cashflow yield of 6pc, while at 49p this week, MmO2 's equivalent valuation remains negative. It might not have Vodafone's scale or profitability but there is room for upside. A risky buy.

Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (48.15%) 13 (56.37%) 2,220,593 52.67 - 53.48 1,718,940 (43.63%) 14 (51.85%)
5% (52.38%) 22 (56.60%) 4,531,766 52.40 - 53.74 3,474,702 (43.40%) 20 (47.62%)
10% (59.70%) 40 (63.92%) 6,480,328 52.08 - 53.81 3,658,222 (36.08%) 27 (40.30%)
15% (60.53%) 46 (65.91%) 7,127,660 51.76 - 53.83 3,685,922 (34.09%) 30 (39.47%)
50% (60.49%) 49 (68.63%) 8,083,728 51.09 - 53.84 3,694,226 (31.37%) 32 (39.51%)
100% (60.92%) 53 (68.46%) 8,128,848 51.03 - 53.99 3,744,918 (31.54%) 34 (39.08%)
all (60.23%) 53 (68.44%) 8,128,848 51.03 - 54.10 3,748,918 (31.56%) 35 (39.77%

mmO2 shares jump as Dutch unit is dumped

By Lucas van Grinsven
AMSTERDAM (Reuters) - MmO2, the smallest of Europe's five listed mobile phone groups, has sold its ailing Dutch unit for 25 million euros to a private equity house and sent its shares surging.

Fuelling renewed speculation that its German unit might be next on the block, British-based mmO2 sold its loss-making O2 Netherlands subsidiary to Greenfield Capital Partners after conceding it lacked the commitment to turn the business around.

After having invested two billion euros on O2 Netherlands over four years, mmO2 Chief Executive Peter Erskine said 25 million euros was "the best price we got". MmO2 OOM.L , which was forced to write down almost the whole investment, had seen no way to make 02 Netherlands "anything more than cash break-even".

Investors welcomed the news, sending shares in mmO2 5.5 percent higher to 52.52 euros by 1100 GMT. The group, which has seen its shares rise 15 percent this year, is one of the top restructuring stories in Europe's mobile phone market.

"The amount of money they got is relatively irrelevant," said one London-based telecoms analyst. "What's more important is that they are exiting from a business that was burning cash."

New owners Greenfield Capital Partners gets a debt-free company with an 11 percent market share. It plans to cut staff to 550 from 715, reinstate the unit's former name Telfort and delay any investments in a high-speed, third-generation (3G) mobile network. Greenfield already owns Enertel, a major Dutch Internet Protocol data provider.

GERMANY IN FOCUS

Analysts have long expected mmO2 to sell its Dutch unit, which operates in Europe's most competitive mobile phone market, and the sale has refocused market attention on mmO2's other loss-making unit, O2 Germany.

Both the Dutch operation and O2 Germany, which has a market share of around 7.8 percent, have been under management review. But O2 Germany has beaten financial targets and has extended a network-sharing agreement with T-Mobile to cut costs as it rolls out a costly 3G mobile phone network.

"The move seems likely to reinvigorate reports that O2 Germany is about to be sold to (Netherlands-based) KPN KPN.AS ," said Mark James, analyst at Nomura in London.

"But don't buy (mmO2 shares) in anticipation of a 1.0 billion euro-plus sale to KPN, because in our view it remains unlikely, despite the obvious fit."

Fresh speculation about a sale was sparked last week after KPN voiced interest in O2 Germany, which would help beef up its own German unit E-Plus and help build a viable rival to T-Mobile DTEGn.DE and Vodafone Group Plc VOD.L , which together control 80 percent of the German market.

Both KPN and mmO2 insist there are no talks about combining their German arms, and insist that last year's exploratory talks about a full-scale merger to create a company with a market value of about 20 billion euros came to nothing.

"(The Dutch deal) demonstrates a degree of pragmatism on the part of the management, which was never going to be forced to commit itself to keeping the whole of the footprint together," said another London-based analyst.

"(But) I don't think this means any sale in Germany is more likely, simply because the arguments are different. There is one obvious buyer in the form of KPN -- it's not a matter of trying to find a private equity company. What happens there will ultimately be a function of price rather than anything else."

MmO2 also has fully-owned units in Britain and Ireland.

GOING DUTCH

MmO2 said it would book a charge of around 1.4 billion pounds for the sale, including taking on around 200 million euros of debt from the unit. The charge will be an exceptional item in results for the fiscal year to end-March.

O2 Netherlands will continue as a local player with a down-to-earth new brand and market approach, Chief Executive Ton aan de Stegge told reporters. The business has a 3G licence, but its new owners have no plans to invest millions of euros in fast 3G services, such as mobile video calls.

Aan de Stegge said the case for 3G was unproven.

In the light of the L2 figs does it not indicate the offer must hit 53.5 to take out sell orders? Also the BUY orders being so below current price doesn't that make them redundant?

in a way ...... you look at the most recent orders placed and tend to ignore those out of touch with current price action

L2? Any further progress? Still hoping the offer can be pushed to 53.5 within next one hour!

sector is plus 1% - market 1% and nas plus 2.5 points


Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (50.00%) 20 (37.72%) 1,971,343 52.59 - 53.46 3,254,733 (62.28%) 20 (50.00%)
5% (51.85%) 28 (46.34%) 4,328,413 52.35 - 53.65 5,011,352 (53.66%) 26 (48.15%)
10% (56.58%) 43 (54.81%) 6,283,182 52.04 - 53.69 5,180,872 (45.19%) 33 (43.42%)
15% (57.65%) 49 (57.09%) 6,930,514 51.72 - 53.71 5,208,572 (42.91%) 36 (42.35%)
50% (57.78%) 52 (60.19%) 7,886,582 51.04 - 53.72 5,216,876 (39.81%) 38 (42.22%)
100% (57.73%) 56 (59.06%) 7,931,702 50.98 - 54.33 5,497,568 (40.94%) 41 (42.27%)
all (57.14%) 56 (59.05%) 7,931,702 50.98 - 54.40 5,501,568 (40.95%) 42 (42.86%

By Friedel Rother

LONDON, April 14 (Reuters) - UK stocks were pushed up by a buoyant banking sector on Monday and gains for mobile operator mmO2 , while Wall Street added to the cheer with modest gains after a good start to the reporting season.

The FTSE 100 benchmark index was up 36.1 points, or one percent, at 3,844.2 by 1400 GMT. The market has rallied 17 percent over the past five weeks but is still four percent below where it started the year.

A flood of results are due out from both U.S. and UK companies this week. But despite encouraging news from financial services giant Citigroup (NYSE: C - news) , market observers remained wary.

"People are not going to be too concerned about the results themselves but more about the outlook for the rest of the year. I think it'll be quite cautious, quite tough," said Martin Cobb, investment manager at SVM Asset Management.

Mobile phone operator mmO2 was the biggest FTSE gainer. The shares rose 5.5 percent to trade around a five-month high after mmO2 sold its ailing Dutch unit for 25 million euros.

Merrill Lynch (NYSE: MER - news) upgraded the stock to "buy" and said the sale was good news for shareholders and the company.

Lloyds TSB (LSE: LLOY.L - news - msgs) was another top riser, up 3.6 percent on a report it is looking to sell its New Zealand banking unit, said to be worth up to $3.26 billion. Lloyds declined to comment on the weekend story in the Australian Financial Review.

Other banks also fared well, including Abbey National (LSE: ANL.L - news - msgs) and HBOS , both 2.7 percent better. The sector accounted for a third of the FTSE's overall gains.

Dealers said banking stocks were seen as an obvious play for investors betting on an improvement in the economy.

What's L2 showing now? It hit the price I wanted it to but I'd like it to close there now!

Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (51.85%) 14 (57.84%) 2,034,707 52.69 - 53.57 1,483,186 (42.16%) 13 (48.15%)
5% (47.06%) 16 (43.79%) 2,512,247 52.56 - 53.80 3,224,805 (56.21%) 18 (52.94%)
10% (48.08%) 25 (47.83%) 4,213,576 52.06 - 54.07 4,595,120 (52.17%) 27 (51.92%)
15% (51.67%) 31 (51.27%) 4,860,908 51.60 - 54.08 4,620,820 (48.73%) 29 (48.33%)
50% (52.31%) 34 (55.69%) 5,816,976 50.70 - 54.10 4,629,124 (44.31%) 31 (47.69%)
100% (52.78%) 38 (54.42%) 5,862,096 50.62 - 54.75 4,909,816 (45.58%) 34 (47.22%)
all (52.05%) 38 (54.40%) 5,862,096 50.62 - 54.83 4,913,816 (45.60%) 35 (47.95%

If only I could predict things as accurately as today! Nice bullish stance with close @53.25↑6.5%. Lets pray & hope that tommorrow see's this make further gains to the upside.

Volumes increased as the day went by - now 128 million or 50% up on average

disposal of 02 Netherlands leads Merrill Lynch to upgrade its recommendation to 'buy', dealers said.

The US broker, which formerly rated the shares a 'neutral', set a price target of 66 pence on the stock. Its move follows mmO2 announcing this morning that it is selling O2 Netherlands operation to Greenfield Capital Partners for 25m. "We believe that this is a good deal for mmO2," Merrill advised clients. "Today's announcement is further evidence that mmO2 management is working in shareholders' interests.

The transaction will improve the financial profile of the group and allow management to concentrate efforts on the UK and Germany," it said, Merrill sees the Dutch market as too competitive, with five competing operators and 75% penetration at the end of 2002. "We believe mmO2 had little chance of gaining critical mass given that nearly 70% of the market is controlled by KPN and Vodafone and subscriber growth has stalled." But today's deal "transforms" mmO2's financial profile, it argued. Net debt is now expected to peak at 0.9 bln stg, compared to the 1.15 bln Merrill had previously forecast.

Tomorrows press looks good


April 15, 2003

MmO2 launches shake-up with Dutch disposal
By Nic Hopkins TIMES



MMO2 yesterday began its long-awaited consolidation of European assets by selling its loss-making Dutch subsidiary for 25 million (17 million), bringing the mobile phone operator a 1.4 billion charge.
The writedown is in on top of the 2 billion that mmO2 has invested in the subsidiary over the past three years.

The sale fanned speculation about mmO2s future in Germany, where it owns the smallest of four mobile networks. MmO2 has previously held talks to merge its business with that of KPN, the Dutch owner of third-ranked E-Plus.

Peter Erskine, mmO2 chief executive, said the sale price of O2 Netherlands was the best price we got, given that the company had seen no way of making the business anything more than cash break-even.

The business was bought by Greenfield Capital Partners, a private equity firm, which is to reinstate the old Telfort name, and defer spending on third-generation mobile technology.

MmO2 had struggled to stoke buying interest in O2 Netherlands after Vodafone ended talks to acquire it in January. The Dutch division ranks fourth in its market, has just over a million customers and recorded operating losses of 49 million in the six months to September 30.

Analysts said the sale price was more than O2 Netherlands was worth, despite the one-off charge that mmO2 will take as a result of the sale.

MmO2s German arm, with a book value of 6 billion, has 4.6 million customers but is barely profitable. The German market leaders, Vodafone and Deutsche Telekoms T-Mobile, each have more than 20 million customers and collectively control 80 per cent of the market.

MmO2 said that the division needs to lift its market share from 8 per cent to 12 per cent to be sustainable, although analysts say that closer to 20 per cent is needed. The fastest way to hit the target in a mature market would be to merge with E-Plus, which has a 20 per cent market share.

Rodney Sherrington, an ABN Amro analyst, said: In the long run, a merger is going to happen. But there is no pressure to do a deal immediately and the management appear to have no intention to rush.

Tempus



MMO2s disposal of its Dutch subsidiary has come sooner than most investors would have dared to hope. Shareholders were told of the companys intention to sell last November, when mmO2 presented its latest set of half-year results. But given the unenviable position of the business, and the straitened financial circumstances of most trade buyers, few would have held their breath for a deal.
The emergence of Greenfield Capital Partners, a private equity group, has not only allowed mmO2 to sell more quickly than was hoped. Greenfield has also paid more for the business than many would have thought likely. A sum of 25 million (17 million) hardly sounds princely, but the fact that the business is loss-making meant that most analysts ascribed a negative net worth to it. As importantly, the sale removes a notable distraction for mmO2 managers, giving them more time to focus on the stronger operations in the UK, the Irish Republic and Germany.

However, the true significance of the deal comes not in the speed of its execution, or the financial terms or the management ramifications. The true significance is in the nature of the buyer. Private equity groups are not sentimental sorts. They want to see positive cashflow. If Greenfield has its chequebook out, it suggests that there is hard cash to be made in mobile telephony.

Of course, the cash-generative qualities of mobile phone operators may not be as positive as Greenfields interest in mmO2s Dutch business suggests. Private equity firms across Europe are flush with cash since investors in them have been so attracted by the rates of return delivered in the recent past. They may feel the cash burning a hole in their pockets and are taking on riskier ventures in order simply to get invested. In addition, Greenfield already owns the Dutch fixed-line telecoms formerly owned by Energis and may see some more amorphous strategic advantage in crunching the two together.

However, if Greenfield thinks there is a reasonable return to be made out of the relatively weak player that is O2 Netherlands, it will do nothing but encourage investors in stronger outfits. Private equity buyers affection for exit routes also means returns may come more quickly than is often assumed. It may also imbue mmO2s domestic business in the UK, and its German operations, with a potential value exceeding current reckoning. It may even heighten hopes that the whole of what was BT Cellnet will be bid for. Hold.

Durlatcher says charting wise the shares have lifted up through the top of a congestion band ie around the 50p level and are poised to break out in a serious way - need to get through the next barier at 55p ..... I still hold and hold the most I have held in recent times ..... hanging on for the ride



ains

Lehman Bros retains its overweight rating in mmO2 raising its price target to 73p from 70p following yesterday's sale of O2 Netherlands.

L2? Are any other firms currently updating forecasts & price targets after the disposal.

i expect they all are .... but don't have any more details at this time


Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (32.26%) 10 (29.70%) 1,057,687 53.72 - 54.46 2,504,102 (70.30%) 21 (67.74%)
5% (34.04%) 16 (36.93%) 2,506,449 53.32 - 54.68 4,280,050 (63.07%) 31 (65.96%)
10% (32.76%) 19 (40.64%) 3,258,622 53.07 - 54.77 4,758,673 (59.36%) 39 (67.24%)
15% (35.00%) 21 (41.52%) 3,378,522 52.99 - 54.77 4,758,673 (58.48%) 39 (65.00%)
50% (38.81%) 26 (49.63%) 4,696,162 51.21 - 54.78 4,766,977 (50.37%) 41 (61.19%)
100% (41.89%) 31 (49.64%) 4,749,282 51.09 - 54.89 4,817,669 (50.36%) 43 (58.11%)
all (40.79%) 31 (47.54%) 4,749,282 51.09 - 58.58 5,241,669 (52.46%) 45 (59.21%

Is L2 still quite weak? Cannot believe how far its fallen due to bad US figs. I really need the US to end +ve in a similar manner to yesterday & O2 closing near the 54.25 level today.

US is improving a little - L2 also



Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (57.14%) 16 (56.56%) 1,813,784 53.08 - 53.97 1,393,175 (43.44%) 12 (42.86%)
5% (47.37%) 18 (49.26%) 2,155,622 52.99 - 54.17 2,220,214 (50.74%) 20 (52.63%)
10% (34.48%) 20 (40.20%) 2,576,177 52.79 - 54.54 3,832,537 (59.80%) 38 (65.52%)
15% (37.70%) 23 (43.46%) 2,946,077 52.21 - 54.54 3,832,537 (56.54%) 38 (62.30%)
50% (39.39%) 26 (50.47%) 3,913,717 50.70 - 54.55 3,840,841 (49.53%) 40 (60.61%)
100% (42.47%) 31 (50.48%) 3,966,837 50.56 - 54.69 3,891,533 (49.52%) 42 (57.53%)
all (40.79%) 31 (47.89%) 3,966,837 50.56 - 59.19 4,315,833 (52.11%) 45 (59.21%)