After one week and 16 rounds of bidding, incumbent operator Orange plc led all third-generation license bids in the United Kingdom with a $632.9 million bid for License B. The auction for five licenses, which is expected to last another one to five weeks, could rake in anywhere from $7.9 billion to $9.5 billion for the U.K. government.
Before the final Orange bid, Vodafone AirTouch plc and BT3G, British Telecommunications’ 3G venture, had tied with the highest bids of $473.5 million for license B. License B is the second-largest spectrum allocation.
License A, which includes the most spectrum of the five Universal Mobile Telecommunications System licenses, is reserved for a newcomer in the U.K. mobile market. After 16 rounds of bidding, NTL Mobile-backed by NTL and France Telecom-led the bidding for license A at $383 million.
The NTL bid was more than $185 million over the minimum $197.7 million bid for license A. The license is being hotly contested among the nine nonincumbent companies vying to enter the lucrative U.K. wireless market.
London-based Continental Research predicts that more than one in two British adults will own a cellular phone by the middle of this year. The country’s mobile phone users almost doubled in 1999 from 12.9 million to more than 24 million.
Canada’s Telesystem International Wireless had led the bidding for license A most of the week. TIW owns Dolphin Communications, which operates a digital terrestrial trunked radio network in the United Kingdom. SpectrumCo, a consortium that includes Virgin Mobile and Nextel Communications Inc., had tied TIW last Thursday with a bid of $365 million for license A.
TIW also bid for license C and held the high bid of $227 million for that block of spectrum at the end of last week.
License D drew a high bid of $217 million from Spain’s Telefonica, followed by a bid of $216 million from Epsilon, a wholly owned subsidiary of Japanese finance house Nomura, for license E. Licenses C, D and E offer the same amounts of spectrum.
The U.K. mobile phone market includes four wireless carriers, each of which would like to secure a UMTS license. However, speculation has circulated among industry analysts that the auctions could bring two newcomers to the U.K. wireless arena.
All of the 13 companies that submitted deposits of about $82.3 million to enter the auction are still in the running. Besides incumbents Orange, Vodafone and BT, Deutsche Telekom-owned One 2 One also is participating.
Other companies involved in the auctions include U.S. companies MCI WorldCom Inc., through its WorldCom Wireless subsidiary, and Crescent Wireless Ltd., a company backed by Global Crossing shareholders. In addition, Australia’s One.Tel and 3GUK, a company owned by Irish telecom company Eircom, are participating.
License A consists of two by 15 megahertz of paired spectrum and 5 megahertz of unpaired spectrum. License B is two by 15 megahertz of paired spectrum, and the other three licenses include two by 10 megahertz of paired spectrum and 5 megahertz of unpaired spectrum.
Finland awarded the first four 3G licenses last year through a “beauty contest.” Winners included the state-controlled incumbent, Sonera; Radiolinja, Telia Finland; and the Suomen Kolmegee consortium, comprised of 41 members of the Finnet Group of local phone companies and Sweden’s Tele2.
3G networks promise to allow carriers to offer high-speed data services, such as Internet access and video over mobile phones.
