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In the papers 29 July
Monday, July 29 2002
by Sylvia Leatham

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Awarding of Irish mobile phone licence to be investigated | Qwest will re-state its results for the last two years following misstatements

According to the Irish Independent, the awarding of a mobile phone licence to Esat Digifone is being probed. A tribunal is examining events surrounding the award of the licence to Esat Digifone, which was partly owned by Denis O'Brien at the time, by former Irish Communications Minister Michael Lowry. O'Brien told investigators he considered giving the minister EUR127,000 in 1996 but didn't make the payment because it would be "misconstrued." The Irish government could be forced to pay as much as EUR2 billion to compensate companies that failed to win the licence if the tribunal discovers any wrongdoing by the government.

The same paper reports that Internet service provider Freeserve has confirmed it may re-brand, a move that could change the e-mail addresses of 2.5 million customers. Freeserve, the UK's largest ISP, is considering whether to adopt the name of Wanadoo, the French company that bought Freeserve for STG1.65 billion in December 2000. If the re-branding goes ahead, customers would have to change the end of their e-mail addresses to wanadoo.com. Some analysts believe the re-branding could cost STG30 million.

The Irish Times says that Deutsche Telekom's new chief executive will reportedly be Thomas Middelhoff, the chairman and chief executive of German media giant Bertelsmann. Middelhoff, who was appointed chief executive of Bertelsmann in 1997, was prompted to consider the move following disagreements with the board about the company's future direction and plans to go public in 2005, according to Bild newspaper. Bertelsmann declined to comment on reports that its board had agreed to replace Middelhoff after he announced he was leaving for Telekom.

The same paper says that telecoms regulator Etain Doyle will be part of a three-person commission in a new telecoms regulatory body that will replace the ODTR. The decision of the Minister for Communications, Marine and Natural Resources, Dermot Ahern, was announced in advertisements seeking applications for the two other seats on the commission. The new commission will be responsible for regulating and licensing the electronic communications sector, regulating the postal sector and managing the radio frequency spectrum. The announcement of Doyle's appointment put an end to speculation about her future, as it had been thought she might have to apply for one of the posts on the commission in open competition.

According to the Financial Times, mobile phone operator Vodafone met expectations as it unveiled a rise in average revenues per user (ARPU), especially in its UK and German markets. The company said it had added 2.7 million new customers in the first quarter, bringing its total customer base to 103.9 million at the end of June. In Germany, higher-value contract customers rose to 44 percent of the user-base, lifting ARPU to STG302, while in the UK the percentage of contract customers rose to 39, lifting ARPU to STG278, compared with STG276 in the fourth quarter. The company said ARPU showed signs of improvement mainly due to an increase in customers' usage of their phones and also due to an improving "mix" of contract and pre-paid customers.

The paper also says that the audit committee of Gemplus, the French smartcard maker, has asked the company's founder and former chairman, Marc Lassus, whether he still intends to repay a EUR77 million loan from the company. The audit committee told Lassus, who remains a director, in a letter that it wanted to determine whether or not to write down all or some of the value of the loan. Lassus and the company declined to comment on the letter and the status of the loan, but company observers expect there will be at least a partial write-down when results are reported.

The Wall Street Journal reports that Qwest Communications said it expects to re-state its financial results for 2000 and 2001 and to withdraw its previously reduced financial projections for 2002. The local and long-distance phone company said it has uncovered misstatements that led it to book about USD874 million in revenue for 2000 and 2001 in lump sums up front instead of over time. It also understated expenses in 2001 by USD113 million, but overstated them by USD15 million in 2000. Chief Financial Officer Oren Shaffer said there was no evidence the misstatements were the result of fraud and the cost errors, although serious, were basically clerical in nature.

The same paper reports that shares in Ericsson plunged 16 percent after the Swedish company's debt was downgraded to junk status and the company said its planned SEK30 billion (EUR3.2 billion) share offering could be endangered. Credit agency Moody's Investors Service downgraded the telecommunication-equipment maker's long-term debt one notch to Ba1, just below investment grade, citing the company's weakening order book. Following the downgrade, Ericsson's American Depositary Receipts closed at USD0.84 on Friday, down USD0.16, on the Nasdaq. Some analysts said investors were alarmed by a subsequent statement from Ericsson saying that the banks underwriting SEK20 billion of the share offering could pull out if Moody's or rival credit agency Standard & Poor's downgrade the Swedish company's debt by another three notches.

The Sunday Business Post reports that Esat BT is hoping to offer a flat-rate Internet access product by the end of the summer at a monthly fee of less than EUR30 if Eircom agrees to a EUR20 wholesale rate. The paper also reports that Hutchison Whampoa has ruled out purchasing Ireland's third mobile operator, Meteor, as a means of giving itself a head-start on building its 3G network here.

Also on Hutchison, the Sunday Times said that the company has admitted its first customers in the UK will suffer "months of dropped calls" because of problems with the first 3G phones. The difficulties are thought to lie with the handover of calls from 3G to 2G networks when callers move outside the urban areas that have 3G coverage. The paper said a solution to the handover problem is expected by mid-2003.

Further to Enterprise Ireland's annual report, the Sunday Independent says that the value of the state agency's investments has plummeted from almost EUR210 million in 2000 to less than EUR35 million last May, following the collapse in the markets. The free-falling share prices of companies like Iona, Datalex, Horizon Technologies and particularly Openwave Systems account for much of the fall, the paper said.

The Sunday Tribune reports that an increasing number of Irish holidaymakers are seeking out Internet cafes and other means of checking their e-mail while on vacation. The report said Irish workers, particularly of those who receive dozens of messages a day, may spend up to half a day of their holiday reading and answering e-mail.

The paper also reports on new research which shows that people who spend long periods playing video games demonstrate less activity in the brain's pre-frontal region, which governs emotion and creativity. Side effects, according to researchers from Nihon University in Tokyo, can include the loss of concentration, an inability to control temper and problems with socialising. Critics have retorted that people who spend many hours a day playing games alone may have behavioural problems to begin with. Full results of the research are to be published this autumn.

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