MmO2 slates bond issue for New Year

Click to follow

The mobile phone company mmO2, which demerged from British Telecom in November, could launch a £1.75bn bond issue as early as next month in a bid to refinance part of its £3.5bn of bank debts.

The company, formerly BT Cellnet, requires £8.3bn to fund investment in third-generation mobile networks and so-called GPRS technology over the coming five years.

About £5bn is slated to come from future operational cashflows, with a further £3.5bn available through overdrafts arranged ahead of its demerger.

It is thought that Peter Erskine, chief executive of mmO2, has approached Deutsche Bank to refinance half the bank debt through a £1.75bn bond issue. He is said to be targeting the third week of January for the issue.

The company declined to comment yesterday on the exact timing of the issue, but a spokesman said it was keen to proceed as soon as market conditions allowed. "No decision has been made on timing," the spokesman for mmO2 said.

A successful bond issue would dramatically cut the cost of the company's debt financing as it seeks to develop mass-production handsets for forthcoming 3G networks. The technology, which gives mobile phones similar functionality to desktop PCs, is not expected to take off until 2003.