The German telecoms regulator has said it will allow mobile phone companies offering third-generation services to share some of the network costs.

The announcement will affect the six telecoms companies that have won third-generation (3G) licences from the German government, including BT-controlled Viag Interkom, Vodafone's D2 and Deutsche Telekom's T-Mobile.

The German watchdog, RegTP, has said the rules allow the companies to share radio base stations and the towers and antennae that sit on top of them.

Clarification by the regulator of the strict European rules governing the German telecoms market could save the companies billions of euros in network costs.

Relief

RegTP said it is offering "helpful advice" to licence holders on the extent to which they can cooperate.

Matthias Kurth, chairman of RegTP, said any cooperation would need to be examined on an individual basis.

The new interpretation of the rules will come as a relief to the mobile phone companies - many of which have amassed huge debts purchasing 3G licences throughout Europe.

Viag Interkom has said infrastructure sharing could reduce its costs by 20-30%.

But some analysts have cast doubt on the potential for cost savings from network sharing.

They say there might be modest savings to be made from sharing networks in rural areas but operators should want their own individual infrastructure and distinctive service in more densely populated areas where usage and profits are likely to be greater.

More needed

On the German licences alone, the six companies spent a total of 50.8bn euros ($43bn).

Analysts estimate that they also face a bill of 8bn euros each to build the 3G networks, which will provide speedy mobile internet and data services.

Some companies hope the German watchdog will go further than it has already and allow them to share entire networks with rivals.

They would also like to have licence fees refunded in the event of a merger.

France Telecom-backed MobilCom and Group3G - a joint venture between Spain's Telefonica and Finland's Sonera - are expected to benefit the most from being able to share infrastructure.

Both groups need to build 3G networks from scratch in Germany.

50% coverage by 2005

Larger operators such as D2 and T-Mobile face lower costs because they already have a network in place for their current second-generation mobile phone services.

The remaining licence holder is E-Plus, controlled by Dutch carrier KPN Telecom.

The licence holders are required to achieve 50% coverage of the German population by 2005.

With transmission speeds nearly 40 times the existing standard, 3G will allow mobile phones to be used more like computers, with access to the internet, video and e-mail.