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GERMANY CHOOSES BT PARTNERSHIP TO PROVIDE FOURTH PCS PERMIT

As expected, the partnership of British Telecommunications plc and Viag AG, E2 Mobilfunk, received a license to operate a fourth mobile phone network in Germany.

E2 Mobilfunk was the sole applicant for the Digital Cellular System 1800 personal communications network license.

Luca Tassan, analyst with Strategis (formerly MTA-EMCI) of London, said E2 plans to target fixed wireless users. Tassan expects the new operator will use price to compete with the three entrenched mobile operators.

E2 Mobilfunk is on target to start service second quarter 1998, said Tassan. European Union rules require members to open telecom markets by Jan. 1, 1998. One specification is that two operators must be licensed at 1800 MHz, using the DCS 1800 standard, an upbanded version of Global System for Mobile communications technology.

Viag owns 62.5 percent and BT owns 37.5 percent of E2 Mobilfunk.

Germany’s Ministry of Posts and Telecommunications did not announce a license fee, but sources presume E2 will be charged about $35 million, which is in line with what existing operators paid for their licenses.

Last fall, the Ministry showed concern that only BT/Viag answered its tender for the E2 license. One BT spokesman said the company was not too surprised. He said that only a strong contender with German presence could jump into the competitive and advanced German market, and few players are left that fit the bill.

However, Vebacom GmbH, an alliance of German conglomerate Veba AG, London-based Cable & Wireless plc and German utility & power giant RWE Telliance, has been gearing up to compete with Deutsche Telekom as a whole, in wireless and wireline telecommunications. RWE previously was allied with BT and Viag, but bowed out, wanting to focus instead on local loop applications.

The D1 cellular network is operated by T-Mobil, the mobile arm of Deutsche Telekom. The D2 cellular operator is Mannesmann Mobilfunk GmbH, a joint venture of Mannesmann AG and AirTouch International. The E-Plus consortium, which includes Veba AG, Thyssen AG, BellSouth Corp. and Vodafone plc, operates the E1 DCS 1800 network.

As of December, the operators accounted for 5.5 million subscribers, or 7.1 percent penetration. T-Mobil is the market leader for total analog and GSM digital subscribers, but on GSM alone, the operator runs a close race with Mannesmann.

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