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Telefónica exits cell auction
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April 17, 2000: 11:04 a.m. ET
Spanish firm drops out of U.K. cellular bids; six players chase five slots
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LONDON (CNNfn) - Spain's Telefónica on Monday refused to dig any deeper in its quest for a U.K. mobile-phone operating license and pulled out of the escalating auction of next-generation cellular licenses. Telefónica became the 7th bidder to drop out of the contest, leaving just six fighting for the five licenses.
The five leading bids currently total around £21 billion ($33.6 billion), creating a massive windfall for the British government. Most analysts had expected the auction to raise around £5 billion, but the B license alone, which contains the largest amount of spectrum available to an existing cellular network operator, is the subject of a bid worth £5.67 billion from Vodafone AirTouch (VOD). 
The A license is available only to new entrants to the U.K. cellular market. Canada's Nasdaq-listed Telesystem International Wireless (TIWI: Research, Estimates) leads the bidding for that franchise with an offer of £4.38 billion.
The other bidders in leading positions for the five licenses are: NTL (NTLI: Research, Estimates), a Nasdaq-listed U.K. cable operator, which has the backing of France Telecom (PFTE); British Telecom (BT-A), the U.K.'s former state-owned phone service company; and One2One, the British cellular operator that belongs to Germany's Deutsche Telekom (FDTE).
Of Britain's four existing cellular providers that leaves Orange as the only one without a leading bid. Orange is effectively owned by Vodafone, following that company's acquisition of Orange's parent, Mannesmann. The European Union ruled last week that Vodafone must divest Orange.
Next-generation cellular licenses will run on the Universal Mobile Telecommunications System (UMTS), and will allow high-speed Internet access and video pictures on cellular handsets. 
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