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POLITICS, ECONOMIES CAUSE AUCTION DELAYS

Political turmoil and economic problems around the world have delayed tenders and auctions of mobile phone spectrum in some countries.

At least three Latin American countries-Argentina, Colombia and Venezuela-have put on hold plans to grant wireless concessions.

“In all three markets, the concessions are up in the air right now. There are lots of factors, ranging from the politics of tenders due to the political power of incumbent cellular operators to the politics of spectrum allocation and the upcoming liberalization of basic services,” said Erica Eppinger, research analyst with Pyramid Research in Cambridge, Mass.

Argentina’s personal communications services tender process has been stop and go. The government resumed the bidding process earlier this year after allegations of scandal and legal issues tainted last year’s attempt. The process has once again ground to a halt due to a lawsuit from Canadian company Telesystem International Wireless Inc. that claimed the bidding process is unfair because it allows the five existing cellular licensees to compete for new licenses. Analysts indicate Argentina is studying a plan to sell licenses outside the capital of Buenos Aires, which will allow it to evade the lawsuit. The government may grant a total of four licenses.

Another main problem, said Eppinger, is spectrum allocation.

“As soon as the regulator feels there is a good solution, one of the operators finds a problem with the allocation of spectrum,” she said. “Eventually licenses will be awarded. The liberalization of basic services and whether or not operators can provide fixed PCS are other issues.”

The Colombian Ministry of Communications initially released plans to tender PCS permits in February, but the country’s incumbent cellular operators slowed the process, arguing the government was not allowed to license competitors before September 1999, the month when Columbian cellular operators lose market exclusivity.

Bruce Edgerton, senior consultant with the Strategis Group in Washington, D.C., said a Colombian court sided with the country’s cellular operators and ruled the government could not start tendering licenses until September 1999.

Now, with a new president at the country’s helm, the Colombian administration is going to revamp the entire PCS tender process, said Eppinger. It is unclear when the government will announce a tender date, she said.

Edgerton said the big issue in Venezuela is the country’s new telecom law, which two weeks ago emerged from a government committee. The country’s first attempt at granting two PCS licenses last November didn’t find any takers.

“The big question is the regulatory environment,” said Edgerton. “Venezuela has specific budget goals … And Venezuela has been hit because of the Russian crisis. The price of oil has fallen, causing them to revamp the budget. They keep cutting down to the bone.”

Uncertainty also surrounds Venezuela’s regulatory telecom agency, Conatel, which the government reshuffled in August. Positions are likely to change again in December with government elections, said Eppinger, and no tender plans are expected to go through before then.

Currency crises in countries across Asia mean several countries have delayed tender or auction plans in the long term.

“The Philippines and Indonesia are on a very long-term hold,” said Kari Roe, analyst with International Technology Consultants in Bethesda, Md. “One issue as to why countries are stalling is that they don’t want to sell at a price that reflects the current currency valuations.”

Countries suffering from severe currency devaluations already have struggling operators. New carriers would have difficulty raising money to purchase a license and operate a new network.

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