MobilCom said the return of the licence to the country's Regulatory Agency for Telecommunications and Post would leave it free to act as a UMTS services provider.

"This would not have been possible had the company insisted on keeping its own license, as licensees may not be service providers at the same time," said the troubled company, which is on the road to recovery from near-bankruptcy.

UMTS, or Universal Mobile Telecommunications System -- also known as third generation (3G) -- is a technology designed to provide e-mail, high-speed Internet access and live sound and image broadcasts to compatible handsets.

MobilCom, in which France Telecom is the principal shareholder, said it would consider the possibility of seeking compensation from the regulatory authority for its losses.

But the authority in a statement Tuesday stressed that compensation for the return of a license was not stipulated in the prevailing legislation.

After having come close to bankruptcy last year, MobilCom had no choice but to abandon its UMTS venture.

Under German law, MobilCom was required by the end of 2003 to have in place a UMTS network covering a minimum 25 percent of the German population.

With France Telecom refusing to continue to finance MobilCom, the German operator had hardly been in a position to meet the deadline and has been seeking partners.

But no associate has stepped forward, reflecting investor uncertainty over the profitability of 3G mobile telephone technology.

The decision to abandon its UMTS license should have no financial consequences for MobilCom, as the company has already depreciated the value of its investments.

But it is France Telecom, which holds a 28.5-percent stake in MobilCom, that could feel the pain.

The French group agreed last year to assume 7.1 billion euros' worth of debt carried by MobilCom -- largely attributable to the cost of its UMTS license -- in order to spare MobilCom from bankruptcy.

Another group operating in Germany, the Quam consortium grouping Telefonica of Spain and Sonera of Finland, already has given up plans for a German UMTS network.

Sonera still maintains its license but is likely to have it revoked early next year by the regulatory authority for having failed to meet its contractual conditions.

In addition to Sonera, UMTS licenses for Germany are currently held by Deutsche Telekom, Vodafone, E-Plus and O2.

SPACE.WIRE