Mobile phone operator O2 is in trouble with regulator Ofcom for not completing the roll-out of its 3G network to the pre-set timetable.

O2 has been given 4 months to complete the work to Ofcom's satisfaction or it will face a 4-month reduction in its 3G license - and fines of up to £40 million.

The other four of the five 3G licensees have complied with rules that stated their 3G networks had to cover 80% of the population by 31 December 2007, but O2's network only covers 75.7%.

An O2 spokesperson said the company will meet Ofcom's requirement before June, stating:

"O2's strategy has been to roll out our 3G network in areas where there is the most demand, providing high quality, in-building coverage in those areas. We have rolled out our 3G network to over 75% of the population. Where we do have coverage it has consistently provided the best quality. We also have one of the larger 3G customer bases."

O2 is the operator that offers Apple's iPhone in the UK that runs on the EDGE 2.5G network and used resources last year increasing EDGE coverage in the UK.