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NTL bails out of auction
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July 6, 2000: 6:59 a.m. ET
Cable firm frightened from Dutch cell auction as rivals consolidate
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LONDON (CNNfn) - Several rival telephone companies made last-ditch pacts as the Netherlands' auction of next-generation cellular-phone licenses prepared to get going Thursday, frightening off an expected bid from U.K. cable operator NTL Inc. even before the auction started.
Hong Kong's Hutchison Whampoa also pulled out Thursday, the first day of bidding for the five licenses to operate third-generation mobile phone services in the Netherlands. Hutchison, though, is widely expected to unveil a European alliance with incumbent Dutch operator Royal KPN, which remains in the licence auction.
 Cellular phones operating with Universal Mobile Telecommunications Standard (UMTS) technology - also called third-generation phones - will permit advances such as high-speed access to the Internet and give users the ability for video conferencing.
Eight bidders were expected to line up for the auction, but on Thursday it emerged that Belgium's Belgacom has tied with Deutsche Telekom AG (FDTE), and Reuters reported that Dutch newcomer Versatel hinted it had found a partner, although details weren't revealed.
NTL (NTLI: Research, Estimates) spokesman Will Robson confirmed the Nasdaq-listed U.K. cable company was pulling out of the auction process at the last minute because of consolidation among rival bidders.
Earlier in the year NTL also drew a blank in the U.K. auction of UMTS licenses. It was the last participant to drop out of the auction, when bidding for the five British licenses finally got too hot.
Prices for the U.K. licenses soared way beyond the expectations of the government, industry analysts and the companies involved, eventually totaling £22.5 billion ($34 billion). Germany is set to begin its auction process at the end of July, which could dwarf the sum raised in Britain.
The rising cost of the licenses has worried some in the industry, who warned that consumers would have to bear the brunt in terms of higher prices, and that the massive sums being laid out might inhibit future corporate investment plans.
Five of the original bidders in the Dutch auction already operate digital cellular services: KPN, Vodafone AirTouch PLC's subsidiary LiberTel, British Telecommunications PLC's Telfort and France Telecom SA's Dutchtone, along with Ben, an alliance between Belgacom SA and Tele Danmark A/S. The final remaining bidder is VersaTel, which has no cellular assets.
The results of each day's auction bids will be posted on the Internet at: www.veilenvanfrequenties.nl/.
The incumbent operators were rewarded with rising stock prices after the news of the pullouts, as investors speculated the reduced number of bidders could help to keep a lid on the price of licenses. KPN stock jumped more than 4 percent to  48.98, while LiberTel rose almost 6 percent to 17.65.
VersaTel shares fell 1.7 percent in Amsterdam, reflecting the market's perception of its reduced chance of success. Analysts have suggested that incumbent players have significant cost advantages over bidders without a network of their own. 
-- from staff and wire reports
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