The Italian government named the Wind consortium the winning bidder for the country’s third mobile phone license, bringing to a close a tender process that began in the fall of 1996.
The Ministry of Communications made the announcement June 10, the day its adviser, Italian bank Crediop, completed its assessment of the bids.
Wind, created Dec. 1, is made up of Deutsche Telekom, France Telecom and Enel SpA-the state-owned Italian electric company. The license allows the consortium to operate a nationwide dual-band Global System for Mobile communications network based on Digital Communications Services at 900 MHz for 55 years.
Other bidders included Picienne Italia SpA-consisting of British Telecommunications plc, Italian TV broadcaster Mediaset and Norwegian telecom operator Telenor-and Telon, a last-minute bidder controlled by Italian highway company Autostrade SpA, Bell Canada International and Hong Kong’s Distacom Communications Ltd.
Wind will compete with incumbent mobile phone operators Telecom Italia Mobile and Onmitel. The two incumbent operators will be prohibited from offering their own DCS 1800 services for six months, allowing the newcomer time to get up to speed before competing with the others. Wind previously won a license for fixed network services.
“We are very proud of this new success, which proves the strength of our partnership with Deutsche Telekom and Enel and underlines our joint commitment to the Italian market,” said Michel Bon, chairman and chief executive officer of Wind member France Telecom. “This is one of the positive results achieved with the liberalization of the European telecommunications markets.”
“The partnership between Deutsche Telekom and France Telecom in the Wind joint venture means that we can create for our Italian customers an Italian service portfolio with a European dimension,” said Dr. Ron Sommer, chief executive officer of Deutsche Telekom.
Italy is considered an important wireless market in Europe, with 13.3 million cellular subscribers and a 21.1-percent penetration rate. Wind is expected to take away some market share from the two current operators. The consortium’s goal is to take 20 percent of the mobile market and 15 percent of the fixed-line market in the first decade.
Analysts expected a Wind victory in the tender process. Italian Prime Minister Romano Prodi’s main political opponent, Silvio Berlusconi, owns Mediaset-a member of the Picienne consortium-and Telon’s last-minute participation gave many doubts as to the consortium’s success.
Expectations aside, Enel’s role as the state-controlled electric company created some political sparks. Because Autostrade, part of the Telon consortium, and Banca Nazionale del Lavoro, part of the Picienne venture, are both state-controlled organizations as well, some analysts said political controversy could not be avoided. However, Enel holds the greatest share in the Wind consortium, 51 percent, while the Italian members of the other consortia held smaller shares. Also, privatization plans are in place for Autostrade and Banca Nazionale del Lavoro, while none are secure for Enel.
It was the politically charged nature of the much-desired tender that caused the many delays in the tender process. The government originally said it would open the tender in the fall of 1996, which was delayed until later that year and again to March 1997. After another delay to September 1997, which also was postponed, the Italian senate ratified a lower house decree that set a May 31 deadline.
With the license awarded, the path is clear for the Ministry of Communications to begin the process for a fourth mobile license tender, which could begin by the end of the year.
