Mobilcom admits profits are a long way off

German mobile operator, Mobilcom, claims the high cost of its UMTS licence will mean it will be unable to post a profit for several years.

Thorsten Grenz, chief financial officer of Mobilcom, said the company would not make a net profit until 2007. However, he predicted Mobilcom will post positive earnings before interest, tax and depreciation in 2003. Mobilcom paid E8.4bn (£5bn) for one of the six UMTS licences on offer in Germany. France Telecom, which owns 28.5 per cent of the telco gave E3.7bn (£2.2bn) in funding to pay for the licence. The telco also received bridge financing of E5.7bn (£3.4bn) from Merrill Lynch and Deutsche Bank. The majority of the money will be used to finance the UMTS licence bill and the remaining E1bn (£600m) will stay on standby for banking fees and costs.