Ailing German telecom firm Mobilcom AG is close to selling its third-generation (3G) mobile phone network to Dutch KPN's German arm, sources close to Mobilcom's supervisory board said on Monday.
The board will discuss a draft contract to sell the fledgling network, including 3,600 sites for antennae and some equipment for around 20 million euros ($22.5 million), to KPN's E-Plus at its meeting on Tuesday, the sources said.
"The agenda lists the contract as an item to be discussed," one source said. The sources said they could not rule out a sale to another buyer but thought it was unlikely.
Spokesmen for Mobilcom and KPN confirmed they were still talking but said no contract was signed yet.
Indian investment group Hinduja TMT said it was not interested in buying Mobilcom's 3G assets, denying earlier statements by sources close to the supervisory board.
Mobilcom dropped its bid to become the fifth contender to provide 3G services -- which allow video and pictures to be sent via mobile phones -- in Europe's largest telecom market when it fell out with its partner France Telecom last year.
Buying Mobilcom's network would speed up E-Plus's own 3G network rollout, which started in March and has to cover a quarter of Germany's population by the end of the year.
E-Plus is Germany's third-largest mobile phone operator with 7.3 million subscribers. The market is dominated by Deutsche Telekom's T-Mobile and Vodafone. British mmO2 plc is the smallest German operator.
No Indian surprise
After an acrimonious row that mesmerised the telecom market in Germany and France, Mobilcom agreed to freeze its 3G
Mobilcom has said it expected to raise 10-30 million euros in the network sale, of which it has to pass over 90 per cent to France Telecom. The network sale does not include the licence.
Apart from E-Plus, mmO2 is also looking at the network, and the sources said Indian investment group Hinduja TMT had approached Mobilcom as well and could bid for the precious license and Mobilcom's customer base as well, effectively taking over the whole group.
But a Hinduja TMT vice-chairman Solomon Raj told Reuters the company had been approached by Mobilcom on Monday but it was not interested in buying the assets.
"We got a message today asking if we would be interested in the 3G operations and we replied saying we have no interest," Raj said.
Hong Kong-based conglomerate Hutchison Whampoa, which has 3G operations in several European countries, was also interested in the network, German newspaper Die Welt reported on Monday.
However, time was getting tight for any other bidder, a Mobilcom spokesman said.
France Telecom has pledged to carry the costs of Mobilcom's unwinding its 3G operations only until the end of the year, putting pressure on the operator to sell the network quickly.
(Additional reporting by Rosemary Arackaparambil in Bombay, Chris Borowski in Amsterdam and Boris Groendahl in Frankfurt)