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German mobile bids mount
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May 2, 2000: 10:21 a.m. ET
Incumbents lead 12-strong challenge for possible $45B mobile-phone auction
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LONDON (CNNfn) - Germany's telecom regulator said Tuesday that 12 bidders would contest the auction for third-generation mobile-phone licenses, sell-off that analysts say could raise up to $50 billion.
The higher-than-expected prices bidders paid last month in Britain's auction of cellular licenses raised expectations of the sums telecom companies would pay to operate advanced mobile-phone services in Europe's third-largest mobile-phone market after the U.K. and Italy.
The so-called UMTS licenses allow operators to provide fast Internet access through mobile phones and to deliver services such as high-quality video and data feeds. The five winners of U.K. UMTS licenses paid a total of £22.58 billion ($35.5 billion), some eight times initial estimates.
Bidders for the licenses are attracted the German cellular market's potential for growth. In population terms, Germany, with 82 million inhabitants, is about one-third bigger than the U.K., but only about 32 percent of potential users have cellphones, compared with nearly 50 percent in Britain. Forecasts of the potential value of the German licenses are based on the average $600 per head of population achieved in the U.K. auction.
The German telecommunications authority will sell between four and six licenses, depending on the outcome of the auction.
Germany's four existing mobile operators all registered to bid Tuesday. The bidding is scheduled to start in July or August, with services due to come on line in 2002.
Bidding line-up
Among confirmed bidders are Deutsche Telekom (FDTE); the Mannesmann unit of British mobile giant Vodafone AirTouch (VOD); E-Plus, which belongs to Royal KPN of the Netherlands; and Viag Interkom, a unit of German power utility Viag.
They are joined by Debitel, a provider of fixed-line and mobile services that Swisscom bought earlier this year; and Germany's Mobilcom, in which France Telecom (PFTE) bought a 28.5 percent stake in March; French water utility and telecom operator Vivendi (PEX); and U.S.-based MCI-Worldcom (WCOM: Research, Estimates).
The final four bidders are Talkline, the mobile arm of Tele Danmark and SBC Communications (SBC: Research, Estimates); Group3G, a consortium including Vodafone's Orange unit, Spain's Telefónica and Sonera of Finland; Hong Kong-based Auditorium Investments; and a company called Netz, about which the telecommunication authority didn't immediately disclose any ownership information.
Germany is the only European country to follow the U.K. example of selling the new licenses by multiple-round auctions, a system that helped drive up prices in the British contest. Most other countries have so far chosen license holders via a "beauty contest", in which an applicant's ability to provide depth and quality of continuing service is the main selection criterion, rather than the amount of cash it is prepared to stump up.
However, the Netherlands is holding a single-bid auction, and finance minister Gerrit Zalm said Sunday that the government hoped to raise around $8.3 billion for the five licenses on offer. Bids are expected to open in July. 
-- from staff and wire reports
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