O2 reported a £9.6 billion write-off and a total loss to the end of March 2003 of £10.2 billion. The write-off is related to 3G licences fees in UK. The operator attributes £5.9 billion of the write-off to the fall in the value of those licences that it fought for and bought three years ago. Hitherto they were valued in mm02’s accounts at £10 billion.

The remainder of the £9.6 billion write-off comes from the fall in value of acquisitions since the bursting of the dot com and telecoms bubble.

Admitting that the company had simply paid too much for some of its possessions, mm02’s chief executive, Peter Erskine said, “We have taken a realistic view of our asset value. I think there is a general understanding in the European telecoms market that we overpaid for 3G. 3G will definitely succeed, it’s just later than we expected”.

Mr. Erskine insisted that despite the huge write-off, the figures show that mm02 is fundamentally strong. In the first year of operation as mm02 (the company used to be BT Cellnet until it was spun out of its parent organisation in late 2001) revenue rose by 14% to £4.9 billion and pre-ebitda earnings shot up to £859 million from the £433 million reported in its last year as part of BT.