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Canadian leads U.K. auction
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March 7, 2000: 4:53 a.m. ET
TIW stakes claim for new next-generation mobile license, leading 13 bidders
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LONDON (CNNfn) - Canada's Telesystem International Wireless (TIW) has emerged as the surprise high bidder for one of the five next-generation mobile-phone licenses being sold by the U.K. government in the first contest of its kind in Europe.
Nasdaq-listed TIW (TIWI: Research, Estimates) bid 170 million pounds ($267 million) Monday for the most coveted of the quintet of so-called third-generation licenses on offer because it has the largest spectrum.
With the auction set to continue throughout the month, the initial bids are more than twice the early forecasts for the licenses which will allow operators to provide enhanced voice and data communications, including Internet access, via cellular phones. Analysts had expected the five to fetch around 2 billion pounds between them but some estimates suggest the auction could raise closer to 5 billion pounds.
"I would certainly expect to see 500 million sterling per license," Steve Trowbridge, telecoms services analyst at UK stockbroker Teather & Greenwood told Reuters. "It comes down to the depth of pockets of some of the new entrants on what the top end of the range will be, but 1 billion (sterling per license) is certainly not out of the realm of possibility, although I'd say that is at the top end," he added.
The government pre-qualified 13 bidders in January, with the four existing cellular network operators - Vodafone AirTouch, BT Cellnet, Orange and One2One - all joining in as expected.
TIW's offer was accompanied by a 107.4 million pound bid for the second of the licenses from Orange, Britain's fourth-largest mobile operator. Orange was controversially allowed to bid despite being owned by Mannesmann, now controlled by Vodafone AirTouch (VOD), which was making a separate bid in its own name.
Crescent Wireless, a new company with a significant stake in Global Crossing (GBLX), and Australia's one.tel tied for the third license with offers of 89.3 million, the minimum under the auction rules. One2One, the U.K.'s smallest existing operator, and Epsilon tied for the fourth license, also with 89.3 million pound bids. One2One is owned by Deutsche Telekom (FDTE) while Epsilon is controlled by Japan's Nomura Securities.
No bids were received for one of the licenses.
The auction will continue Tuesday, with the highest bidders for each of the licenses sitting out the second round. The process continues until there are no further bids, with the license awarded to the highest offer for each of the five.
The government is almost certain to give a license to the four incumbent operators, say analysts, leaving the raft of additional candidates to fight it out for the sole remaining license.
Spectrum, a company owned by Richard Branson's Virgin Group, was among the high-profile contenders not featured in the first round. Cable operator NTL (NTLI) is also seeking a license, partly as a conduit for major shareholder France Telecom's (PFTE) ambitions to expand outside its home market.
Other registered bidders include Spain's Telefónica, U.S. telecom giant MCI WorldCom (WCOM) and Ireland's Eircom.
The so-called UMTS (Universal Mobile Telecommunications System) licenses will allow operators to offer high-speed Internet access, electronic mail and videoconferencing while on the move.
Spain is also auctioning next-generation licenses, and Germany and France are considering similar moves. 
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