mmO2 sells struggling Dutch unit for €25m
British-based mobile operator mmO2 has said it will book a €1.4 billion charge to ditch its struggling Dutch unit, selling it to an investment firm for €25 million.
After having invested two billion in its Dutch unit over four years, mmO2 Chief Executive Peter Erskine said €25 million was "the best price we got". Mmo2 had seen no way to make 02 Netherlands "anything more than cash break-even".
Analysts said it was a harsh reality check for everyone.
"This shows you how much that business was originally seen as being worth...but the market is littered with precedents like this, where valuations have shrunk beyond all recognition in the space of two to three years," one London-based analyst said.
"The amount of money they got is relatively irrelevant. What's more important is that they are exiting from a business that was burning cash." he added.
Investors welcomed the news, sending shares in mm02, the smallest of Europe's five listed mobile phone companies, higher on hopes the company that has been dogged by merger speculation could make a fresh start.
Mm02 shares, which have gained around 15 per cent this year, rose by 3.5 per cent to 51-3/4 pence by 0901 GMT.
New owners Greenfield Capital Partners will "streamline" O2 Netherlands, bring back the former name Telfort, and delay any investments in third-generation UMTS networks. Greenfield also owns Enertel, a major Dutch Internet Protocol data provider.
Mm02, the British-based mobile phone company spun off from BT Group Plc in 2001, has wholly-owned businesses in Britain, Germany, Ireland and the Netherlands.