Sun, Jan 11, 2004 - Page 11 News List

Quam refuses to return a US$10.5 billion bauble


Quam, a once-mighty telecoms operator that imploded to little more than a German post office box, is doggedly hanging on to a precious but useless bauble: an 8.3 billion euro (US$10.5 billion) universal mobile telecommunications system (UMTS) licence.

Quam choked on the 2000 purchase of the licence from the German government to run a third-generation mobile phone network.

In November 2002, Quam's global system for mobiles (GSM) system was switched off after the venture's owners, Telefonica of Spain and Sonera of Finland, realized they had backed a dud. Quam closed and the third-generation phone network was never built.

So what becomes of the licence? The purchase rules clearly said: No refunds and no transfers.

For Quam, the licence is rather like the evil ring that none of the characters in The Lord of the Rings movie trilogy wants to surrender. At handover time on Dec. 31, Quam just could not bear to mail it back.

Georg Berger, a lawyer for Quam, said defiantly Friday, "And we're not going to either."

In a report to appear in yesterday's Sueddeutsche Zeitung, he said: "How can it be that we pay 8.3 billion euros for this and are then supposed to just hand it in again?"

Perhaps it takes a special kind of courage to lick the stamp, shut the envelope and say goodbye to 8.3 billion euros. As write-offs go, that must be a record. But a second German mobile phone company, MobilCom, steeled itself a week ago and did exactly that.

MobilCom also bought a German operating licence and nearly went bankrupt as a result. It has survived as a reseller of phone contracts, which was how it began in pre-UMTS days.

The German authorities say the end of last year was the deadline: build a network that can reach 25 percent of Germany's population or lose the licence.

The four remaining licence holders, T-Mobile, Vodafone, E-Plus and 02, have diligently built transmission masts, though none of the networks is yet on air.

Since the heady days of the August 2000 auction, when unprecedented sums were bid for UMTS rights, telecoms executives have realized that a majority of consumers are not very interested in high-speed mobile phones.

For UMTS to succeed, millions of people will have to have become keen photographers and filmmakers.

And pay for the privilege.

Berger says the government should compensate Quam for buying the useless licence, though the Sueddeutsche says he more likely wants to sell the licence, as Quam was allowed to do in Austria.

In the meantime, Berger says, he will read the contract again and rack his brains for some way of suing to get the money back.

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