O2 could lose 40 million pounds if its 3G rollout does not reach 80 per cent of the population by June.
Ofcom last year requested each of the five networks with 3G licences to make 3G services available to at least 80 per cent of the population from December 31, 2007. An Ofcom assessment showed that O2 only reached 75.69 per cent of the population in the time given.
Ofcom has now issued O2 with a notice according to the Wireless Telegraphy Act for licence breaches. This proposes that if O2 has not met the rollout obligation by the end of June 2008, Ofcom will shorten the term of its 3G licence by four months to August 31, 2021.
O2 acquired its 3G licence in 2000 for just over £4 billion. Ofcom estimates that a reduction of the licence term by four months could see O2 lose at least £40 million.
O2 has until June 30 to meet its obligation.