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Hutchison joins Italian bid
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August 14, 2000: 8:25 a.m. ET
Hong Kong conglomerate takes majority stake in UMTS consortium
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LONDON (CNNfn) - Hong Kong-based conglomerate Hutchison Whampoa Ltd. said Monday it will take a majority stake in a consortium bidding for one of five next-generation mobile phone licenses in Italy.
Hutchison said it bought a 51 percent stake in Tiscali's Andala SpA alliance in hopes of garnering a third-generation license, which would allow the winning companies to deliver high-speed Internet access, video transmission and other technologies via cellular phones. Hutchison's entry into the Italian auction had been rumored for the past two weeks.
Countries across Western Europe, most recently Germany, have been auctioning licenses to offer Universal Mobile Telecommunications Standard (UMTS) wireless technology. Italy is seen as a particularly attractive market for the technology, because about 60 percent of the country's 57 million population already have cellular phones.
"We are very happy to team with a leading company like Tiscali and other members in the Andala consortium," said Canning Fok, group managing director at Hutchison Whampoa, in announcing the pact.
No financial terms were disclosed. Hutchison did not immediately return a call requesting comment.
Tiscali, an Italian-based Internet and telecommunications firm, now will hold a 25.5 percent stake in the alliance. The company is in "exploratory" negotiations to merge with Dutch-based World Online to form Europe's second-biggest Internet service provider.
Other investors in Andala include industrial holding company CIR, which is controlled by the De Benedetti Group; San Paulo-IMI with 5 percent, Andala President Franco Bernabe with 2 percent, HdP with 1 percent, and holding company Gemina, 0.5 percent.
Italy plans to offer five third-generation licenses in November under a two-step process. The government first will hold a "beauty contest" to determine the quality of the bids, then an auction stage in which bidders will be able to increase their offers.
'A key player'
Hutchison, a telecom and real estate conglomerate controlled by Hong Kong billionaire Li Ka-shing, recently struck deals with KPN Telecom and Japanese cellular phone operator NTT DoCoMo to bid for next-generation mobile licenses in Germany, France and Belgium. That alliance already holds a third-generation license in the U.K.
"We think that Hutchison has the financial power and the overall ability to aggressively bid all across Europe," said Holger Grawe, a telecom analyst for WestLB Panmure. "They are on their way to become one of the key UMTS players in Europe besides Vodafone AirTouch, France Telekom and Deutsche Telekom."
Deutsche Telekom had been in talks with Tiscali about joining the Andala alliance, but a deal never materialized.
Four of the five licenses in Italy are seen going to the country's four mobile phone technology operators: Telecom Italia Mobile, Omnitel, Wind and Blu, leaving Andala, competing consortium IPSE and a few smaller rivals to fight it out over the last remaining license.
The bidding in Germany's auction grew to $31.8 billion Monday. Nigel Hawkins, an analyst at Williams de Broe, told CNNfn.com that the auction could raise about $35.5 billion.
The British UMTS auction in April raised a total of £22.5 billion ($33.75 billion) for five licenses, dwarfing initial estimates of £3 billion. The sum shocked the industry and sparked a major sell-off in telecom shares.
Growe said he anticipates the Italian auction will draw less than the German one, but had no estimates for how high the bidding could reach.
Dresdner Kleinwort Benson estimates that the Italian licenses are worth 4.5 billion euros ($4.09 billion) each.
The deadline to apply for a UMTS license in Italy is Aug. 24. 
-- from staff and wire reports
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