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U.K. launches mobile sale
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November 1, 1999: 6:13 a.m. ET
Government to auction new generation licenses; one earmarked for new entrant
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LONDON (CNNfn) - The U.K. government confirmed Monday that it will auction five licenses for the new generation of cellular phones, sparking a scramble among at least a dozen contenders.
The sale is scheduled for March next year, with analysts forecasting that each license will fetch at least £400 million for the right to offer new technology giving mobile users Internet access.
U.K. industry minister Patricia Hewitt said that one license will be reserved for a new entrant. The other four are widely expected to be taken up by the incumbent cellular operators: BT Cellnet, Vodafone AirTouch (VOD), Orange (ORA) and One2One.
The companies have all expressed interest in a third-generation license, with initial bids due in by Jan. 12.
The government has set a reserve price of £500 million for all five licenses, but analysts believe intense competition among new entrants will push up the final offers sharply.
Richard Branson's Virgin Group, which has a licensing deal with One2One, is expected to launch its own Virgin Mobile service if it wins a license. Business telecom network provider Energis (EGS) is also among the contenders, with cable and media companies also expressing interest.
These include NTL (NTLI), which may act as a conduit for partner France Telecom's entry into the British market. Reuters (RTR), United News & Media (UNWS) and pay-TV giant BSkyB (BSY) are also in the running, alongside supermarket operator Tesco (TSCO).
Justine Hayes, cellular analyst at the Yankee Group, a telecom consultant, said price alone will not dictate the award of the fifth license. Market coverage, innovative applications and cellular experience will also be taken into consideration, she said. 
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