TELECOMS: Shares in mobile phone firm Vodafone and Digifone parent MMO, slumped to four-year lows yesterday on concerns that British Telecom's (BT's) decision to re-enter the wireless market would undermine the companies' future revenues.

Vodafone shares, held by 450,000 former Eircom shareholders, fell 7 per cent to close at 111.5p sterling - less than half its price at the time Vodafone acquired Eircell.

MMO was the biggest loser among Europe's top stocks yesterday. It shed 12 per cent of its value following British Telecom's decision to re-enter the mobile market, closing at a new low of 53½ pence sterling.
The share sell-off followed BT's decision this week to roll out a wireless technology that would enable it to offer internet access in a range of locations from airports to hotels.

Eircom and Esat, the two major Irish fixed-line operators, also confirmed they were studying British Telecom's strategy and may provide "mobility services" using a similar wireless technology here.

Under the terms of Vodafone's acquisition of Eircell, Eircom is prohibited from competing in mobile services. However, the firm confirmed this did not include wireless LAN technologies.

This technology, which is based on wireless local access networks, will enable corporate users to gain high-speed internet access from laptop computers on the move. British Telecom has said it will introduce it in public areas later this year for corporate users.

This wireless technology has a range of just 500 metres but can deliver faster internet connections than the much-hyped third-generation services, which are not expected to be active until 2005.

Analysts said yesterday they were concerned the move by British Telecom may undermine mobile operators' future revenue from third-generation mobile services. They also expressed concern about the future prospects of a mobile resale deal between MMO and its former parent, British Telecom.
Mr Ultan Ryan, an analyst with Mason Communications, said these new wireless services were not a full competitor for third-generation services but would undermine revenues to some degree.

"It is a threat to some revenues, perhaps 17 to 50 per cent, which is a significant chunk of third-generation revenue," he said.

Mr David Taylor, director of regulatory affairs at Esat, said the firm was very interested in the new technology as it may offer another way to break the stranglehold of the incumbents.

Eircom also said it was analysing these new technologies.

Spokeswomen from Vodafone and Digifone said yesterday the new technology was complementary to third-generation services and they were studying it.

The emergence of wireless LAN technology is just the latest factor to undermine confidence in the telecoms sector, which is struggling under huge debt levels.

Vodafone, Cable & Wireless and MMO are among the FTSE 100's five worst-performing stocks this year and several major telecoms firms, including Global Crossing and 360networks, have filed for bankruptcy protection in the past few months.