Mm02 cuts £350m from network bill

INVESTORS in mm02 received a much-needed boost after the BT Cellnet owner revealed reworked supply deals that will slash the bill for its new networks by £350m, or more than one fifth, over the next five years.

Shares in the firm, spun out of BT last year, climbed more than 7% in early trade to 57 1/4p.

Mmo2 said it had replaced its existing supply contracts with strategic partnerships with Nortel Networks and Nokia, which would become the main suppliers of its broadband mobile data network. It has also agreed to outsource its Dutch mobile network operations to Ericsson.

'This is a highly significant development for mmO2, its customers, shareholders and strategic partners,' said mm02 chief executive Peter Erskine. 'It will help us reduce capital expenditure, increase GPRS revenue, reduce time to market of new data products and services and improve network quality of service.'

The deals will reduce mm02's costs by 22% on spending on its 2G, 2.5G and 3G (third generation) networks. The total equipment spend on these arrangements, including the deal with Ericsson, is e2.2bn.

Shares in the business hit a record low last week on fears that it had most to lose from a prospective return to the mobile market by BT.