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.

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.

Seems to be finding resistance/support level @51↑2%. What's L2 like & your predictions for today/tommorrow?

at the moment L2 indicates 4:1 in favour of sellers but we are holding above 50p which would become support if we can hold it for a day or two. The war news seems encoraging and although talk of m+a activity is being played down I think we could see more progress

I really hope this can withstand selling pressure today & move past 52. What's L2 showing? US futures have improved from this mornings lows. VOD L2 now 15M each way so hopefully a +ve day.

Volumes are low this morning - markets a little undecided where to go - sector is down 1.1% as is the market ...... L2 is more than 2:1 in favour of buy orders but they mostly want to buy sub 50p.

A lot of short covering yesterday and msaybe an attemp to recover their losses today - OOM still holding it's own at evens


ains




Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (70.00%) 7 (77.28%) 612,889 50.55 - 51.47 180,224 (22.72%) 3 (30.00%)
5% (64.29%) 9 (58.14%) 742,889 50.43 - 51.82 534,945 (41.86%) 5 (35.71%)
10% (70.00%) 14 (65.28%) 1,011,923 49.91 - 51.83 538,245 (34.72%) 6 (30.00%)
15% (64.52%) 20 (86.44%) 3,628,257 48.44 - 51.99 569,365 (13.56%) 11 (35.48%)
50% (61.76%) 21 (72.50%) 3,653,257 48.42 - 54.94 1,385,699 (27.50%) 13 (38.24%)
100% (58.54%) 24 (71.77%) 3,673,377 48.35 - 55.32 1,444,695 (28.23%) 17 (41.46%)
all (57.14%) 24 (71.72%) 3,673,377 48.35 - 55.58 1,448,695 (28.28%) 18 (42.86%)

Seems to have swapped places with VOD now. What's your predictions for both today & L2 now?

I would like to see another day @ 50p+ ........ there is no new news at the moment - US futures are up (nas +8) - war news is mixed - US president is talking on box right ...... I think e will get a dip and a recovery



ains



Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (42.86%) 12 (33.71%) 837,861 50.03 - 50.83 1,647,490 (66.29%) 16 (57.14%)
5% (50.00%) 17 (39.46%) 1,236,814 49.83 - 50.92 1,897,559 (60.54%) 17 (50.00%)
10% (56.82%) 25 (65.51%) 3,905,051 48.66 - 51.01 2,055,580 (34.49%) 19 (43.18%)
15% (55.77%) 29 (66.95%) 4,226,321 48.52 - 51.06 2,086,000 (33.05%) 23 (44.23%)
50% (53.57%) 30 (59.42%) 4,251,321 48.50 - 52.73 2,903,034 (40.58%) 26 (46.43%)
100% (52.38%) 33 (59.05%) 4,271,441 48.44 - 52.96 2,962,030 (40.95%) 30 (47.62%)
all (51.56%) 33 (59.02%) 4,271,441 48.44 - 53.09 2,966,030 (40.98%) 31 (48.44%

too high just sold 24,628

Any further comments? What's L2 looking like & is this going to fall any more?

Nas is about to open and still a few points up - sector is down just over 1% and the msarket about the same - volumes are very low @ 25 million though .... price is edging down - L2 is about evens ..... guess it's going to depend on the market .... ST traders may cash out - personally happy to ride it out


ains



Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (50.00%) 14 (48.12%) 1,340,171 49.60 - 50.39 1,444,788 (51.88%) 14 (50.00%)
5% (43.24%) 16 (45.00%) 1,646,365 49.49 - 50.55 2,012,266 (55.00%) 21 (56.76%)
10% (47.92%) 23 (60.17%) 4,179,761 48.61 - 50.83 2,767,030 (39.83%) 25 (52.08%)
15% (48.28%) 28 (61.77%) 4,526,031 48.47 - 50.87 2,800,750 (38.23%) 30 (51.72%)
50% (45.90%) 28 (55.58%) 4,526,031 48.47 - 52.26 3,617,784 (44.42%) 33 (54.10%)
100% (45.59%) 31 (55.29%) 4,546,151 48.41 - 52.45 3,676,780 (44.71%) 37 (54.41%)
all (44.93%) 31 (55.26%) 4,546,151 48.41 - 52.55 3,680,780 (44.74%) 38 (55.07%)

I bought these last Autumn at 40p. AsI posted above I sold my holding of 24,628
for a respectable 50.3p, a reasonable 25% mark up, I missed the highs of 55 ish, but happy enough with 2.5k.
Watch out for 40p again soon I shall be , and back in again.

Seems to be catching up with VOD now. What's your predictions for both today & L2 now?

I think it's unlikely we will move above 50p today although it will be close - nas is down 2.5 points - sector is flat - volumes back to normal after yesterdays low ..... L2 is slightly in favour of buyers

I ago for just sub 50p on current news

ains


Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (46.15%) 12 (29.71%) 1,214,236 49.11 - 49.93 2,873,132 (70.29%) 14 (53.85%)
5% (58.82%) 20 (43.88%) 2,246,560 48.89 - 49.93 2,873,132 (56.12%) 14 (41.18%)
10% (67.44%) 29 (57.43%) 3,875,984 48.50 - 49.93 2,873,132 (42.57%) 14 (32.56%)
15% (65.31%) 32 (61.98%) 4,698,040 48.05 - 49.94 2,881,682 (38.02%) 17 (34.69%)
50% (58.18%) 32 (55.91%) 4,698,040 48.05 - 51.06 3,704,958 (44.09%) 23 (41.82%)
100% (56.45%) 35 (55.62%) 4,718,160 48.00 - 51.27 3,763,954 (44.38%) 27 (43.55%)
all (55.56%) 35 (55.60%) 4,718,160 48.00 - 51.37 3,767,954 (44.40%) 28 (44.44%

I really hope you spoke to soon Ains and that we close at a minimum of 51. L2? Thankyou :)

buys are creeping up


Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (72.22%) 13 (41.86%) 905,623 49.70 - 50.21 1,257,927 (58.14%) 5 (27.78%)
5% (81.48%) 22 (57.75%) 1,719,684 49.41 - 50.21 1,257,927 (42.25%) 5 (18.52%)
10% (83.33%) 35 (72.57%) 3,763,791 48.72 - 50.36 1,422,927 (27.43%) 7 (16.67%)
15% (70.91%) 39 (59.02%) 4,685,847 48.20 - 52.35 3,254,053 (40.98%) 16 (29.09%)
50% (69.64%) 39 (59.01%) 4,685,847 48.20 - 52.35 3,254,753 (40.99%) 17 (30.36%)
100% (66.67%) 42 (58.68%) 4,705,967 48.15 - 52.56 3,313,749 (41.32%) 21 (33.33%)
all (65.63%) 42 (58.65%) 4,705,967 48.15 - 52.68 3,317,749 (41.35%) 22 (34.38%)

Are the sells orders getting taken out and BUY order prices rising enabling this to go higher & break 51 resistance? Thankfully US is appreciating achievements in Iraq! DOW +85pts US↑1%.

they are trying to topple a big statue of SH right now in the middle of the city :-))

The intraday trading graph looks like we will soon move one way or other - probability northwards



Buy orders Sell orders
Num(%) Num Vol(%) Vol VWAP Vol Vol(%) Num Num(%)
1% (57.89%) 11 (60.84%) 1,624,502 49.72 - 50.32 1,045,587 (39.16%) 8 (42.11%)
5% (67.86%) 19 (61.22%) 2,201,182 49.55 - 50.49 1,394,318 (38.78%) 9 (32.14%)
10% (77.78%) 35 (75.03%) 4,263,741 48.87 - 50.53 1,419,318 (24.97%) 10 (22.22%)
15% (67.24%) 39 (61.47%) 5,185,797 48.38 - 52.43 3,250,444 (38.53%) 19 (32.76%)
50% (66.10%) 39 (61.47%) 5,185,797 48.38 - 52.43 3,251,144 (38.53%) 20 (33.90%)
100% (63.64%) 42 (61.13%) 5,205,917 48.33 - 52.64 3,310,140 (38.87%) 24 (36.36%)
all (62.69%) 42 (61.10%) 5,205,917 48.33 - 52.76 3,314,140 (38.90%) 25 (37.31%)

The statue is down ...... buyers are relatively happy to come in and pay what the sellers want - more buyers than sellers

Massive 2.3M+ trades have just gone through on SELL side. Price withheld. The Statue is OFF. Strangely enough despite all traders watching footage afterwards US went lower! hence UK also.