Tags:Nokia | DSL | broadband

Telefonica''s O2 Germany unit plans to expand its mobile network in the country with China''s Huawei Technologies [HWT.UL] by the end of next year, aiming to compete with heavyweights T-Mobile and Vodafone.

"We still don''t have the network we want to have," Jaime Smith, head of O2 Germany, told journalists on Tuesday.

Smith, who used to head O2''s Czech operations, said the company was following a two-vendor strategy by keeping Nokia Siemens Network [NSN.UL] to build and plan its network in the northern part of Germany, while Huawei would be responsible for the south.

At the moment O2 still uses T-Mobile''s network in some parts of Germany.

"By the end of 2009 we should have a first-class network and we should be able to compete with T-Mobile and Vodafone," Smith said.

O2 is the smallest of Germany''s four mobile phone network operators behind Deutsche Telekom''s T-Mobile, Britain''s Vodafone and Dutch KPN''s E-Plus brand.

Smith declined to say how much the company was spending on the network expansion but said Huawei had offered "very competitive prices".

O2''s parent company, Spanish telecoms giant Telefonica, has said it will invest about 3.5 billion euros ($5.54 billion) between 2007 and 2010 in its German business, the weakest unit in its portfolio.

O2 Germany accounts for only about 16 percent of revenues generated in the German telecoms market, Europe''s largest.

Smith also said he expected to see consolidation in Germany''s market soon.

"We will have fewer players in the near future, we are just now seeing the beginning," Smith said, referring to merger talks between freenet and Debitel.

Freenet and Debitel would have around 20 million mobile phone customers should their talks succeed.

Freenet also has a DSL broadband unit, which it has put on the block.

Asked if Telefonica was interested in acquiring freenet''s DSL business, Smith said, "We may look at it."

The focus, however, was on organic growth, he added.



Source:reuters