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There are many different opinions on the prospects of UMTS or 3G mobile telephone systems. Our paper investigates the financial consequences of the implementation of UMTS on mobile operators. Our analysis is limited to the Swedish market, and we analyse the Swedish 3G licensees with a financial model, which shows annual cash flows, net present values (NPV), breakeven, paybacks and sensitivity analyses. Our results suggest that there will be a substantial profit problem. One of the reasons for the lack of profitability is the increased competition. The market size will set limits to the profits. Besides, the operators’ cost will increase and we do not believe that the average revenue per user will increase much more from today’s level.