3G Licensing round-up

AUSTRALIA

Entries for the Australian auction, due to start in mid-March, have closed with seven bidders putting themselves forward. Four of the bidders - Cable & Wireless Optus, Telstra, Vodafone Airtouch and 3G Investments (Australia) Pty - have opted for the maximum eligibility payment

in order to secure the widest available spectrum range. The other three bidders are Hutchison Telecommunications, AAPT Spectrum Pty and CKW Wireless Pty. Despite the auction in neighbouring New Zealand proving a damp squib with only $58 million being raised, the Australian government had anticipated a pay day approaching $1.38 billion. However, uncertainty in the Australian telecommunications sector threatens to devalue the price of a 3G licence.

Most significant is that one of the bidders, Cable & Wireless Optus, was itself put up for sale by its UK-based parent company in November. Vodafone, facing competition from Telecom NZ and now also SingTel, has publicised its interest in acquiring CWO.

Following discussions with the Australian regulatory body, the ACCC, Vodafone has accepted the necessary divestment of some CWO business units, and an MoU has been reached with Hutchison Telecommunications in order to satisfy competition laws. The agreement would see the transfer of around a million Vodafone customers to the new Hutchison operation and the emergence of Hutchison as Australia's third largest mobile phone operator. Such a deal would leave Vodafone with no more than 43 per cent of the market share.Australia.eps

RUSSIA

The allocation of 3G licences in Russia is now unlikely to take place until 2003. Operators expect to begin network testing in the latter half of this year and as MTS and VimpelCom have already been granted permission to conduct 3G trials, they look favourites to secure UMTS licences. The third licensee will probably be Sonic Duo, backed by Sonera and part-owned by the governmental Central Telegraph. The Russian communications ministry is not looking to charge a great deal for the licences, which will be awarded by way of a beauty contest.Russia.eps

FRANCE

Bouygues Telecom, France's third largest mobile phone operator, has abandoned its bid for a 3G licence after accusing the government of 'economic cynicism' over its fixed-tender asking price of $4.6 billion.

Following on from a similar move by the Telefonica/Suez Lyonnaise alliance to give up on its bid, the Bouygues pull-out leaves just two bidders for the four available licences - Vodafone and Vivendi-backed SFR and France Telecom's Orange. As a result, Orange and SFR have made their bids conditional on the two remaining licences being offered with the same $4.6 billion price tag, a step that will make it difficult for the government to tempt operators like Bouygues back into the reckoning unless they should choose to form operating coalitions. Nevertheless, ART, the French regulator, is refusing to contemplate a reduction in price and has asked the government to open a second round of bidding for the last two licences under the same conditions as the first. The French now appear unlikely to satisfy the European Union's timetable, which requires UMTS licences to be awarded by 1st January 2002.France.eps

TAIWAN

Although industry regulators had favoured a beauty contest for the selection of Taiwan's 3G operators, the Directorate General of Telecomm-unications has now drawn up plans for a licensing auction. Bidding rules will be in place by July with a view to the actual bidding process beginning in October. The continuing debate as to the merits of a single or multi-round procedure means that government approval for the DGT's plans is by no means assured. There is now a preference for four or five eventual operators, with the government hoping for a total windfall of up to $2.5 billion.Taiwan.eps

BELGIUM

The Belgian government brought the country's postponed 3G licensing auction forward from 7th March to 27th February. Further delay was deemed pointless as only three bids had been lodged for the four available licences.. The successful bidders - Belgacom-owned Proximus, Mobistar SA and KPN Mobile - were only required to pay the $140 million minimum for their operating licences.

The government is still hoping to attract another bidder for the fourth licence. It had originally been projected that the auction would raise $1.4 billion.Belgium.eps

CZECH REPUBLIC

The three existing Czech mobile phone operators will, by May of this year, be offered UMTS licences by the government at a price of $134 million each. A fourth licence will then be auctioned to a new operator by September, even though sceptics have suggested that a further potential operator is unlikely to emerge. Despite an explosion in the Czech mobile market last year, the government's target of $536 million has been widely criticised as being over-ambitious.Czech Republic.eps