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MmO2: We've stopped the BT rot

Graeme Wearden ZDNet.co.uk

Published: 17 Mar 2004 13:35 GMT

The chief executive of mobile operator mmO2 told the CeBIT trade show on Wednesday that his business had made a dramatic recovery from the state it was in when it was floated on the stock market in 2001.

Peter Erskine said that mmO2's operations in countries such as Britain, Germany and Ireland were in poor shape when the firm was spun off from BT's mobile operations. Today, it's a different story. He praised O2's partnership with Tesco in the UK and predicted that O2 would soon be providing wireless connectivity for all of Britain's emergency services. However, there was still room for improvement.

"When we split off from BT, our businesses were poor performers. Now, they're all creditable performers, but they're not yet at their peak," said Erskine at the first major press conference of CeBIT 2004.

O2 added over one million customers in both Britain and Germany in 2003, and Erskine claimed that the UK arm had shaken off the problems that had dogged it in 2001 to become a leading player in its market.

BT sold off its Cellnet mobile operations in 2001 via a stock market flotation as the incumbent telco wrestled with massive debts. The subsequent fall in the mmO2 share price led to repeated speculation that the business would be taken over, possibly even by BT. Last month, KPN saw an offer for mmO2 rejected.

Erskine pointed out the dramatic reversal of fortune that O2's UK mobile network has seen. He claims it was recently recognised as being the best in the country, while a few years ago it was struggling to maintain third place ahead of T-Mobile (previously One2One) and was behind Orange and Vodafone. His claim that mmO2 was in something of a state when it floated is surprising given that he was managing director of BT Cellnet between 1998 and 2000, and previously head of BT Mobile between 1993 and 1998.

O2 operates Airwave in Britain, a wireless network used by two-thirds of UK police forces. Despite ongoing concerns about alleged health risks posed by the technology -- which have been repeatedly denied by O2 -- the government wants other emergency services to have a similar system. Erskine is confident that his firm will pick up this additional business.

"Our government, quite rightly, insists on a tendering process, but I expect soon to learn that we have won the contract for the fire and ambulance services," Erskine said.

O2 also reported that its joint venture with Tesco attracted over 200,000 customers in its first five months.