Dutch Auction Ends, French 3G Decision Delayed

Communications Today, July 27, 2000

The march of European markets to riches from auctions of third-generation licenses, cued by the U.K. auction earlier this year, has fallen slightly out of step, but still continues forward.

The Netherlands' auction of five 3G licenses ended Monday with bid totals far below expected levels. The five incumbent operators bid a total of $2.5 billion to each win a license to provide 3G services via universal mobile telecom system networks. The Netherlands government had expected nearly $10 billion from the auction.

While the bid total fell short of expectations, the list of bid winners met analysts' predictions. The only non-incumbent wireless company bidding in the auction, VersaTel 3G, was the only bidder left without a license.

The largest spectrum blocks went to Vodafone AirTouch [VOD] affiliate Libertel for $670 million, and to KPN Mobile [KPN] for $668 million. Dutchtone Multimedia ($409 million), Telfort ($404 million) and Ben Nederland Holding subsidiary 3G Blue ($374 million) each won smaller spectrum blocks.

While German officials next Monday will start auctioning 12 blocks of spectrum in the form of four to six licenses, French officials have pushed back their 3G auction from this month to August or September. French telecom regulators said they need the time to reconfigure how much the country's four licenses will cost.

French officials said they would use results of Germany's auction to determine whether to adjust their license price. Initial costs of $1.9 billion, plus annual license fees, have been suggested by telecom regulators for each French 3G license.

Meanwhile, Poland's telecom regulators reported that they expect to pick four or five companies to receive 3G licenses by the end of the year. Regulators have not decided whether to conduct an auction or to award the licenses based on applicants' financial and technological proposals.

Poland's finance ministry expects to receive $3.22 billion from telecom regulators' issuing of UMTS licenses. The country's two top wireless providers, PTC and Polkomtel, however, said that figure is too high and they plan to pay lower sum for the licenses.

Poland officials plan to reserve one of the licenses for the country's former monopoly telecom provider, TPSA, which owns mobile phone firm Centertel in a joint venture with France Telecom [FTE]. Wireline service provider Netia, controlled by Sweden's Telia, also plans to enter Poland's 3G auction.

Outside of Europe, Australian officials this week said they expect to raise $1.5 billion when they auction 3G spectrum early next year. The country's government is including the expected revenues from the auction in its budget for fiscal year 2001, although many telecom analysts consider $1.5 billion to be a conservative forecast.

The Australian Communication Authority plans to auction 15-year licenses as soon as January. An auction for space on the 1.8 GHz band in the country's five largest cities raised more than $775 million earlier this year, which was much more than expected.

Malcolm Spicer