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German 3G bid tops $31B
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August 14, 2000: 6:44 a.m. ET
Auction for mobile phone licenses heats up, Swisscom's Debitel drops out
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LONDON (CNNfn) - Bidding in Germany's auction for third generation mobile phone licenses raced ahead after a slow start to total $31.8 billion on Monday, in what could be the deciding week for the auction after Swisscom's Debitel unit dropped out on Friday.
The departure of Debitel leaves six bidders battling in the auction for Universal Mobile Telecommunications Standard (UMTS) licenses, which allow operators to offer fast internet access, video and data feeds via mobile phones, in Europe's largest telecoms market.
Analysts see five winners sharing the 12 frequency blocks on offer. Bidders need to secure at least two blocks of frequency to get a license but may also bid for three, leaving open the prospect of a bidding war dragging on for several more days.
Group 3G, which combines Telefónica of Spain with Finland's Sonera, is expected to be the next contender to throw in the towel.
"We expect the white flags to fly over Madrid and Helsinki in the next two to three days." Nigel Hawkins, an analyst at Williams de Broe, told CNNfn.com. "The auction will possibly raise about $35.5 billion, that's just around the U.K. figure. It may just top that."
The U.K.'s pioneering 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.
The country's two biggest mobile phone companies -- T-Mobil, a unit of Deutsche Telekom AG (FDTE), and Vodafone Airtouch PLC's Mannesmann Mobilfunk (VOD) are expected to try to win three blocks each.
Other expected winners include British Telecommunications PLC (BT-A), France Telecom SA (PFTE), and Holland's Royal KPN NV. The Dutch company last month formed a partnership with Hong Kong conglomerate Hutchison Whampoa and Japanese cellular market leader NTT DoCoMo to bid under the name E-Plus Hutchison.
Swisscom and its 74 percent-owned unit Debitel are planning to hold cooperation talks with winners of the German UMTS auction as soon as the process is completed.
Even without a license of their own, Debitel could offer customers UMTS services by buying airtime from the auction winners at a bulk discount and re-selling it under their own brand as a so-called mobile virtual network operator. 
--from staff and wire reports
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