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.

What price did you top up your holding at? Was it 2.3 low hit today? O2 really strong today.

oom is really strong - has been despite the markets - someone accumulating maybe

TWT - various prices but happy to pay 220p or less - I think i have missed the best chance today though

Trading up date - in line with market forecasts/expectations - DAISA analyst Mathew Lewis is impressed -ING Damien Chew has them as a buy and says no surprises


ains



LONDON (Reuters) - Mobile phone group mmO2 has said it expects full-year core earnings to rise in line with analysts' expectations and that it will beat a 10 percent revenue growth target at its main British division.
The London-based group OOM.L , Europe's fifth-largest wireless operator, expected earnings before interest, tax, depreciation and amortisation (EBITDA) to be in line with analysts' forecasts, ranging from 804 million to 892 million pounds.

The consensus EBITDA estimate for the year to the end of March was 838 million pounds, mmO2 said, which would represent a near doubling of the 433 million pounds generated last year.

The company, once part of Britain's BT BT.L , also said it expected its UK division to show second-half service revenue growth in the "mid-teens", meaning it would beat a target of at least 10 percent growth set at the start of the year.

"We are confident that we can continue to deliver improved operational and financial performance and to build the value of the group," Chief Executive Peter Erskine said in a statement.

The company reiterated that capital expenditure would be higher in the second-half than the first, as it had warned at the first-half results.

Accounting standards require it to review the carrying value of its assets on the balance sheet at the end of the year, mmO2 said.

After delivering its first positive EBITDA in the first-half, O2 Germany would show further growth, mmO2 said in its final statement before reporting full-year results on May 21.

MmO2 expected O2 Ireland to see margin improvement and earnings growth, while loss-making O2 Netherlands would break even for the full year. Industry sources say mmO2 has been trying to sell the Dutch unit to one of its rivals.

Shares in mmO2, which closed at 49 pence on Thursday, have underperformed the DJ Stoxx pan-European telecoms index .SXKP by 10 percent in the last 12 months.

Clearly some expectations were higher ......


LONDON (AFX) - mm02 PLC saw its shares fall in early trade as investors responded cautiously to the mobile phone company's latest trading update.
At 9.22 am, mm02 was down 3/4 pence, or 1.53 pct, at 48-1/4 pence.

In a statement, the company said its earnings before interest, tax and debt amortisation (EBITDA) for the 12 months to March would meet average analyst estimates of 838 mln stg.

That compares to analyst forecast range of 804-892 mln stg.

"Given the forecast range, I am sure some brokers will have to lower their estimates for the firm's profits following today's statement," said one London-based analyst who spoke on the condition of anonymity.

Other sector watchers said investors may be concerned at the fact that the company gave little or no guidance over its prospects for 2004.

"The release gave very little detail. There was no mention of 2004 service revenue growth in the UK, which might be an area of focus (for investors)," said Merrill Lynch analyst Linda Mutschler.

The company said its UK business would this year see annual service revenue grow at a rate above its original 10 pct target.

It also said O2 UK is making "steady progress" towards its goal of delivering an EBITDA margin of 30 pct by March 2004.

Its German business, meanwhile, is expected to post a rise in EBITDA over the full year.

mm02 is due to release its full-year results on May 21 2003.

March 28, 2003

MmO2 on track to meet City forecasts
by our business staff TIMES



MmO2, the mobile phone operator spun off from British Telecom, has said it is on track to meet analysts' expectations for underlying earnings as service revenue growth continued at UK operations.

Mm02 said it expected profits before interest, tax, depreciation and amortisation (ebitda) for the year to the end of this month to come in at about the 838 million expected in the City.

The firm's core UK business was set to deliver growth in service revenues above the company's 10 per cent target.

Dutch operations may follow German unit into delivering a profit, on an ebitda basis.

"We have continued to make good progress towards our key targets," Peter Erskine, chief executive, said.

Spending on infrastructure for next generation mobile phones, however, increased in the second half of the year, despite cost controls.

The firm also hinted at writedowns, saying it would be "reviewing the balance sheet carrying value of its assets".

MmO2 shares stood 1.25p lower at 47.75p in morning trade.

MM02 SEES PROFITS RISE SKY NEWS

Mobile phone group mmO2 says it expects full-year core earnings to rise in line with analysts' expectations.

It is predicting that earnings at its main British division will beat a 10% revenue growth target.


The London-based group, Europe's fifth-largest wireless operator, expected pre-tax earnings to be in line with analysts' forecasts of between 804m and 892m.

The consensus estimate for the year to the end of March was 838m, mmO2 said, which would represent a near doubling of the 433m generated last year.

Target beating

The company, once part of Britain's BT, also said it expected its UK division to show second-half service revenue growth in the "mid-teens".

That means it would beat a target of at least 10% growth set at the start of the year.

"We are confident that we can continue to deliver improved operational and financial performance and to build the value of the group," CEO Peter Erskine said.

The company reiterated that capital expenditure would be higher in the second-half than the first, as it had warned at the first-half results.




Last Updated: 10:17 UK, Friday March 28, 2003

LONDON (SHARECAST) - MM02, the former mobile phone unit of BT is on course to analysts forecasts of about 838m in earnings before interest, taxes, depreciation and amortisation from revenue of 4.8bn to end March, it said today.

Chief executive Peter Erskine said, "In the second half we have continued to make good progress towards our key targets. Looking ahead, we are confident that we can continue to deliver improved operational and financial performance."

MmO2 also underlined its growing confidence in its German with market share growth and financial performance ahead of original expectations.

No mention was made on the future for the Netherlands business, which is rumoured to be up for sale. O2 Netherlands is expected to deliver positive EBITDA for the second half and to be close to EBITDA break-even for the full year, said MM02.

Currently↓4%@47 despite inline results. Will probably go to 46.5↓5%. Vol @90M > VOD. What's L2 looking like & do you think 47 is the intraday offer low or could it reach 46.5 after US opens~↓50pts. The BUYS far outnumber the SELLS, perhaps lower possible?

Intraday looks to have levalled off but futures are off and the overall market feel is negative - L2 looks like its picking up but I am inclined to wait for US open - it is the weekend coming up ..... I am looking to buy though




Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (64.29%) 9 (65.42%) 940,568 46.69 - 47.23 497,199 (34.58%) 5 (35.71%)
5% (45.16%) 14 (35.04%) 1,117,628 46.61 - 47.48 2,072,131 (64.96%) 17 (54.84%)
10% (42.86%) 18 (37.19%) 2,370,282 45.87 - 48.06 4,003,766 (62.81%) 24 (57.14%)
15% (37.50%) 18 (27.90%) 2,370,282 45.87 - 48.98 6,124,970 (72.10%) 30 (62.50%)
50% (38.89%) 21 (33.91%) 3,156,946 44.90 - 49.00 6,153,570 (66.09%) 33 (61.11%)
100% (34.43%) 21 (33.58%) 3,156,946 44.90 - 49.17 6,244,342 (66.42%) 40 (65.57%)
all (34.43%) 21 (33.58%) 3,156,946 44.90 - 49.17 6,244,342 (66.42%) 40 (65.57%)

0-1% (64.29%) 9 (65.42%) 940,568 46.69 - 47.23 497,199 (34.58%) 5 (35.71%)
1-5% (29.41%) 5 (10.11%) 177,060 46.61 - 47.48 1,574,932 (89.89%) 12 (70.59%)
5-10% (36.36%) 4 (39.34%) 1,252,654 45.87 - 48.06 1,931,635 (60.66%) 7 (63.64%)
10-15% (0.00%) 0 (0.00%) 0 45.87 - 48.98 2,121,204 (100.00%) 6 (100.00%)
15-50% (50.00%) 3 (96.49%) 786,664 44.90 - 49.00 28,600 (3.51%) 3 (50.00%)
50-100% (0.00%) 0 (0.00%) 0 44.90 - 49.17 90,772 (100.00%) 7 (100.00%)
100%- (0.00%) 0 (0.00%) 0 44.90 - 49.17 0 (0.00%) 0 (0.00%)

Looks like we have seen the bottom intraday


Friday 28th March 2003
Reuters


Orange has signed interconnect deals with all the UK's mobile phone network operators to help increase photo-messaging traffic
Orange says its customers with multimedia messaging service-compatible (MMS) phones can send and receive picture messages on the three other UK networks.

Orange, the country's largest mobile operator, said it had signed MMS "interconnect" agreements with T-Mobile and Vodafone, having already signed one with mmO2. The new agreements would take effect for 230,000 Orange customers on 31 March.



All the operators are keen to allow their customers to send picture messages to friends regardless of the network, in an effort to create more high-margin revenue streams.

Picture messaging kicked off in the UK late last year.

o2 keep talkin but the shares aint walking.....

mmO2 STRENGTHENS BOARD

Released: 01 April 2003

mmO2 plc today announces a further strengthening of its Board timed to coincide
with the end of the Company's financial year and ahead of the expiry of the
Chairman's current service contract as laid out in mmO2's demerger
documentation.

With immediate effect, a further independent Non-Executive Director and three
new Executive Directors and have been appointed to the Board.

David Arculus joins mmO2 as a Non-Executive Director. He is currently Chairman
of Severn Trent Plc and the Better Regulation Task Force. In addition, he holds
non-executive directorships at Barclays Plc and Earls Court and Olympia Ltd. Mr
Arculus has spent most of his career in the media industry including 8 years as
Group Managing Director of EMAP Plc before taking on the chairmanship of IPC
Media Group. He brings to the Board valuable experience as a FTSE director and
considerable knowledge of the media sector.

Dave McGlade, CEO of O2 UK, and Rudi Groger, CEO of O2 Germany - both of whom
have driven significant improvements in the performance of their operations over
the past 16 months - become Executive Directors of the Company, as does Kent
Thexton who, as Chief Marketing and Data Officer, has overseen the highly
successful brand launch and the continued growth in the group's data products
and services. All three remain members of the Executive Committee of the Board,
chaired by Peter Erskine, Chief Executive Officer mmo2 plc.

It was announced in the Company's Listing Particulars at the time of the
demerger from BT that the Chairman's service contract would be reduced to an
average of between two and three days per week as from the 18 June. mmO2 is now
implementing this revision to the Chairman's terms of service and, having
successfully led the Company through demerger in difficult market conditions,
David Varney has agreed to serve as part-time Chairman.

Following these changes, the Board comprises 13 members - seven Non-Executive
Directors, five full-time Executive Directors and a part-time Chairman. Andrew
Sukawaty continues as Deputy Chairman and senior independent Director.

David Varney, Chairman, mmO2 plc, commented: 'I am delighted to announce these
latest appointments which will further contribute to the Board's overall
effectiveness. We continue to have a well-balanced Board of Directors with
considerable strength and expertise, positioning us well for the next phase of
mmO2's growth'.

The changes take into account a number of factors including the implementation
by the SEC of new rules following the passing of the Sarbanes Oxley Act in the
US and the recommendations of the recent Higgs and Smith Reports. Following
the strengthening of the Board, mmO2 will undertake a review of the composition
of its Board Committees.

The Higgs Report made clear recommendations as to the most appropriate fee
structure for Non-Executive Directors. The Company will be revising the
remuneration of its Non-Executives to reflect these recommendations, details of
which will be disclosed as normal in the Annual Report & Accounts.



-ends-

Following news of board room changes at mmO2 we republish our report detailing the interest in the wireless stock by one of the City's leading investment boutiques.


mmO2 is a firm favourite with shrewd fund manager Taube Hodson Stonex, which has been buying recently for several of its funds because at the current price it can finally afford what it believes is now an undervalued utility.

In total, Taube Hodson Stonex (THS) has bought nearly 100 million mmO2 (OOM) shares, spending some 40 million across various of its funds. The St James Place Greater Europe Progressive unit trust St James Place Greater European for example, managed by THS, holds 14.5 million shares or 0.17% of the company.

Nils Taube, one of the three THS partners, is the longest serving fund manager in the UK with 33 years at the helm of the same fund and an excellent long term track record based on his value style. Taube, now in his 75th year, is best known as one of the few investors to be credited with foreseeing the 1987 crash and finding a way to make money from it.

After all these years in the business he still likes nothing more than to sit round the table with his partners John Hodson and Cato Stonex and discuss stock selection.

Stonex told Citywire that the team likes the mobile sector in general, and mmO2 in particular.

'At the current level of valuation, mmO2's especially, the price you pay per customer is very modest,' he said. Stonex reckons the price per customer works at between E700 and E800 (480 to 550).

Stonex reckons that if mmO2 can make 40 profit a year on those customers, the valuation compares very favourably to the 12-15 times earnings multiple accepted as reasonable for a utility.

Stonex said mmO2 still reckons it can make more like 80 profit per customer, but even at 40 it's a good deal.

Shares are currently trading down 1.25p at 45.5p, which Stonex reckons does not price in any future potential for 3G or new services. There has also been concern about how much mmO2 will have to spend on infrastructure to fulfil its 3G licence commitments in Germany, but Stonex reckons the company's deal with Deutsche Telekom to rent 3G capacity could make Germany look quite exciting. He said mmO2 has a lot of subscribers in Germany which are effectively not valued at all, and its ability to borrow capacity from Deutsche Telekom, thereby sharing capital expenditure, could be quite valuable.

Stonex said that THS is basically now buying shares that it just couldn't have afforded before. At one time, mobile customers were being priced at anything up to $10,000 (6,400) per subscriber. Even if growth has slowed considerably since those days, the opportunity has not shrunk by that amount.

Stonex reckons there are plenty of other companies whose shares were at 'autumn sale prices' and which are coming back again at 'spring sale' prices. He cites names like Sainsbury and HSBC, which is currently yielding 5.3%. THS also likes Vodafone, which although considerably more expensive than mmO2 does have far greater global reach and potential also.

One thing he is clear on is that this is the time to buy equities rather than holding bonds or sitting on cash. He said the portfolio has the lowest level of liquid assets since 1998. 'With bonds yielding 4% and Sainsbury yielding 6.5%, I fail to see the point in holding cash or bonds.'

Citywire Verdict:

Stonex is taking a two to three year view on mmO2 and investors should do the same. He would re-evaluate his position if the stock were to rapidly hit the 60-70p mark, at which point it would be prudent no doubt to book some profit.

For the private investor there may be some short-term volatility issues, but worth a punt for the longer term.

* This story was originally published on 31 March.

2003 Citywire

Released: 31st March 2003


mmO2 today announces that the UK's 10th police force has now taken delivery of
Airwave, its advanced TETRA-based emergency communications service. This
sophisticated, fully encrypted digital radio system, which cannot be scanned or
monitored by outsiders, will allow the police to communicate seamlessly and
securely throughout England, Scotland and Wales. The multi-functional handsets,
combining a digital radio and mobile phone, will also (in future) operate as
data terminals - enabling officers in the field to access local and national
databases, such as the Police National Computer and driving licence information.

Cambridgeshire, Derbyshire and Humberside are the latest forces to receive
Airwave, which will be delivered to all 53 police forces in England, Scotland
and Wales by the end of 2005 under a 2.9bn UK Government contract with O2
Airwave, part of the mmO2 group.

Chief executive of mmO2 plc, Peter Erskine, said: 'In these times of heightened
national security and surveillance against possible terrorist activity, we are
now investing heavily in the rollout of the Airwave system which will provide
demonstrable benefits to the emergency services and the public. Over the next
12 months, Airwave will be delivered to a further 26 police forces, including
the Metropolitan Police.

'With bids also submitted for both national fire and ambulance communications
requirements, I'm delighted with the increased take-up of Airwave. The system
is already in use by the Ministry of Defence and, most recently, by two fire and
rescue services, as well as one ambulance NHS trust.'

As well as making a significant contribution to the fight against crime, the
system promotes officer safety, partly because it has better radio coverage and
call clarity, but also because of its emergency button feature, which enables
officers to summon immediate assistance.

Peter Richardson, Managing Director of O2 Airwave, commented: 'The introduction
of Airwave to all the police forces across England, Scotland and Wales is a
major undertaking and is going well. Not only is the service proving its worth
in terms of helping officers to be efficient and effective, but also in ensuring
criminals are less so. A number of instances have been reported in which
criminals have been unable to monitor police activity using conventional
scanners that infiltrate outdated analogue systems.'

The ability for emergency services to be able to easily talk to one another -
particularly at major incidents or national emergencies where fire, police and
ambulance are all involved - is also a key focus at present for the UK
Government, with national procurements well advanced for both fire and ambulance
services. Hereford and Worcester Ambulance NHS Trust recently became the first
NHS organisation to sign up for Airwave, following delivery of the system to
Shropshire and Lancashire Fire and Rescue Services.

Varney to take 150,000 cut in pay at mmO2
By Liz Vaughan-Adams Indy
02 April 2003


David Varney, the chairman of the mobile phone operator mmO2, will take a 150,000 cut in his annual salary when he becomes part-time chairman in June.

The move came as the company said it was reviewing the pay of its non-executive directors as it appointed one more non-executive director and a further three executive directors to its board.

The company, formerly known as Cellnet, has hired David Arculus, who is chairman of Severn Trent, as a non-executive director. It has also promoted three of its managers Dave McGlade, the head of its UK operation; Rudi Groger, head of its German business and Kent Thexton, its chief marketing officer were elevated to executive director status.

Mr Varney, meanwhile, will become part-time chairman from 18 June, working two to three days a week, a move which had been detailed at the time of the company's demerger from BT in 2001 and one which will see his salary fall to 350,000 a year from 500,000.

Following the changes, mmO2's board will have 13 directors seven non-executive directors, five executive directors and a part-time chairman.

The appointment of Mr Groger was also interpreted by City analysts as a sign that it would hang on to its German business for the time being despite persistent speculation that it could be sold.

MmO2 also said yesterday it planned to revise the remuneration of its non-executive directors who currently earn basic salaries of about 30,000 a year to reflect the recent recommendations in the Higgs report on non-executives.

The board rejig came just days after the company hinted that a hefty writedown of its third-generation mobile phone licences was on the cards. The carrying value of the 3G licences on mmO2's books is about 10bn including about 4bn for the UK licence with the balance spread across Germany, Ireland and the Netherlands.

MmO2, which had originally planned to launch the service in the UK two years ago, now expects it to go live in the second half of next year.

CHRISTOPHER HOPE
KPN, the Dutch telecoms group, said yesterday that it would be interested in buying its mmO2's German subsidiary O2 for in a deal which could be worth up to 700m to the UK mobile telephone company.

The news sent shares in mmO2 up 2% as the market welcomed talk of a merger which would create a sizeable opponent to Deutsche Telekom's T-Mobile and Vodafone, which control 80% of the German market.

A deal would help beef up KPN's German unit E-Plus, which is the third-largest operator in Germany but losing market share. Although its smaller rival O2 Germany has been gaining ground on its rival, there has been persistent speculation that its UK parent might sell the unit - for the right price.

MmO2 said all options remained open in Germany.

It added it was happy with the progress of its subsidiary, which has won around 7.8% of the market and has generated its first underlying profits six months earlier than expected.

Still keeps knocking at 50p but without a major market move or outstanding news it is finding 50p a barrier


ains


ABN Amro advises a switch out of Orange into mmO2.



2003 Citywire

UK mobile giant seeks 7.5bn Dutch merger

KPN and mmO2 in 'exploratory' talks to create European wireless champion

Jamie Doward, deputy business editor
Sunday April 6, 2003
The Observer

A management team from mobile phone giant mmO2 has held exploratory talks with counterparts at Dutch telecom operator KPN to create a 7.5 billion pan-European wireless champion.
Informed sources stressed that the talks, held within the last two months, were informal and nothing was currently being discussed. However, news that the two sides are contemplating merger discussions in the near future is a significant development.

LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

hmmmmmmmmmmmm ...... maybe the merger idea will see us through the 50p barrier tomorrow - markets permitting ..... war is going better and talk is we will see a 4000 FTSE if we get an early concusion ..... either way OOM looks looks good


ains




April 07, 2003

Corporate profile No 60: mmO2

Wrestling with the hand dealt by BT
By Dan Sabbagh TIMES



FEW corporations have had their right to exist as maligned as mmO2. The curiously named mobile phone operator was spun out of BT in November 2001 to repeated suggestions that the business, formerly known as Cellnet, was better off abandoning its smaller operations in Germany and the Netherlands because neither were ever going to turn a proper profit.
Yet, without the two units, the four-country operator, which sometimes tries to claim that it has a fifth business on the Isle of Man, would be left with little more than an admittedly profitable British operation that, frankly, amounts to little more than being a sitting duck in the sights of the next telecoms chief executive, be it Spanish, Chinese or Dutch, looking for a scalp.

In the 18 months or so since BTs restructuring, mmO2s essential dilemma remains unchanged, but the balance of the argument has been shifting in its favour a little. The critical German business, fourth in a four-operator market, has at least gained market share and customers since the company became independent. At the time the demerger was announced, mmO2 had 3.3 million customers in Germany and a market share of 6 per cent. Now, with the help of rounding, there are about 4.6 million customers and a market share of 8 per cent.

It is progress of a sort. But, by comparison, the market leaders in Germany, Deutsche Telekom and Vodafone, each have more than 20 million customers. While their operations throw off cash, O2 Germany burnt 50 million in the first half and it is not certain that the operation will have any value. The German market is a mature one and finding new customers will be harder as the months go by.

To be fair, the companys management does face up to the dilemma. Its rhetoric is peppered with realism. Peter Erskine, the chief executive, observes that the company is living with the hand that we were dealt by BT. But he is clear that there is no guaranteed future for the German or Dutch side of the businesses.

We do find whats happened encouraging. We were told that the German business was worthless. Now we read that some analysts are prepared to say its worth 1 billion. Were still open-minded, but the market share gains give us all sorts of options, Erskine states.

Yet, it is clear that despite the humiliation, the company desparately wants the German operation to succeed. It is giving the venture as much time as it can, and more time is being bought through ruthless cash conservation debt is far lower than expected at 609 million and the slight market share gains.

But if the talk is less of abandoning the project, the fixed idea of most City analysts is that the company should sell to, or merge its business, with KPN, the number three operator. The Dutch carriers German arm has 7.2 million customers and together, the units would be profitable, generating perhaps 300 million yearly in a year or two if calculations from BNP Paribas are to be believed.

While the idea is endlessly touted it is not clear that it will happen. KPN, although doing well, is still restructuring, and its management appears to want nothing less than control. Erskine says he is open-minded but he voices objections that suggest otherwise. He says: Yes, there is an obvious scale argument in bringing us together. But there are other questions: integration issues and value for shareholders. In other words, give it time and Germany could be worth much more, an argument that the City would agree has merit, for now.

The groups Dutch business is another matter: mmO2 owns the number four operator in a competitive five-operator market here. The country has a population of only 16 million, and, really, cannot support more than three players. The company has been in extensive talks about selling or merging with local rival Deutsche Telekom, which owns a similar-size business in the country. The reality is that a deal makes sense.

Although the Dutch operation is small and only consumed 32 million of cash in half one, it is going nowhere fast. Nevertheless, there is no reason to close it to simply hand the customers over to another more bloody minded but equally struggling rival.

Yet, if the future shape and existence of the business is unclear, there is no doubt that the company is better off independent from BT. In the UK, Cellnet was, for years, poorly managed compared with Vodafone; but now UK margins are rising towards 30 per cent, although that is still well behind Vodafones 37 per cent. Erskine says that without BT the company has been able to create a pretty good brand, recruit people who would not otherwise have come on board and conserve our capital.

MmO2 may be a minnow with just 19 million customers when compared with Vodafones 110 million plus or Oranges 44 million, but it has been able to rein in its investment. Erskine has repeatedly said that the promised fast-internet, third-generation technology would take far longer to arrive than people expected. Teething technical problems mean his judgment is right, although the first operator, the new kid on the block, 3, has now launched, and as a result mmO2 has been able to avoid costly investment while it builds up its cashflows.

This year the company will spend up to 700 million (480 million) in Germany, where there is a requirement to meet a 25 per cent population coverage. That number sounds big but it is far lower than originally forecast, largely because the operator has struck a co-operative network build agreement with Deutsche Telekom. If BT had its way it would probably have wasted billions in a demonstration of technological virility.

Nevertheless, while not being BT has some merits it is not good enough. MmO2 faces a critical year or two while it demonstrates whether it is viable or just plain hot air.