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TWST: Could you just give me an update on the un-bundling of the local loop?

Mr. Kusch: So far in terms of regulatory introduction of local loop, Germany and the Netherlands have been ahead of everybody else, and the UK will introduce full unbundling in the middle of this year.

TWST: What are the three main criteria that you're using at the moment to select stock in this industry?

Mr. Kusch: Firstly, the companies who will benefit from the change in the industry, which in mobile data is usually the incumbent operators, i.e. the operators who have business customers. For example, Vodafone (LSE:VOD.L) who in nearly all its European networks have the number one and number two position, have 40%-50% of all the business customers in each country, and as I mentioned before, business customer demand will drive mobile data. The other driver at the moment is the indebtedness of stocks. We have, because of the high UMTS licenses and the consolidation in the industries, stocks with tremendous debt on their balance sheet. The key example is KPN which has about EUR25 billion of debt compared to a market capitalisation of about EUR15 billion, and companies like BT (LSE:BT.L) suffer from a high exposure as well.

TWST: Do you feel that there are any stocks out there that could be a disappointment?

Mr. Kusch: We continue to believe next to KPN that British Telecom will find it very difficult to shine over the next couple of months, for similar reasons. If we go through the major trends I mentioned initially, they are very weak in mobile - they have Cellnet in the UK, they have Viag Interkom in Germany, both not very good performers. In terms of business to business data, they have a joint venture with AT&T, Concert, which in our view does not work. They have not achieved the goals they have set out; and thirdly, in the UK they will be hit hard by the unbundled local loop situation. You have in the UK competitors with large networks, which will enable them, once they have the unbundled local loop, to approach a lot of customers quickly, which will lead to market share loss in these areas for BT as well.

TWST: Who are these companies, for example?

Mr. Kusch: Colt (LSE:CTM.L) is one example; Energis (LSE:EGS.L) is a competitor of BT; and Cable & Wireless (LSE:CW.L); these three are probably the main contenders.

TWST: What about pricing pressures of the actual handsets themselves?

Mr. Kusch: First of all, the manufacturers are pressured into vendor financing because of the high license fees for UMTS. On the other hand, they want to get the contracts because the competition, in particular from the Japanese manufacturers, will increase, which if you look at Japan and services like I-Mode, their handsets are smaller, they have colour screens, which should enable these manufacturers to compete very heavily in Europe.

TWST: What are you currently recommending for a conservative or middle-of-the-road pension fund?

Mr. Kusch: At the moment, cash-rich companies, for example Cable & Wireless are definitely a proxy for cash in a sector where people are still afraid that prices are going down further.

TWST: And for a more aggressive investor?

Mr. Kusch: For more aggressive investors I would definitely see people heavily exposed to mobile data services, Vodafone is the best opportunity here.