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Swiss auction postponed
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November 13, 2000: 6:59 a.m. ET
Officials put off mobile-phone license auction; investigation launched
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LONDON (CNNfn) - Swiss telecom officials postponed an auction of next-generation mobile-phone licenses that had been due to start Monday and said they were investigating if any illegal pacts had been made, after the number of bidders in the auction dropped to four, matching the number of licenses on offer.
In the wake of five companies' decisions not to participate in the auction of Universal Mobile Telecommunications Standard (UMTS) licenses, the Swiss Federal Office of Communication said it was investigating if there were "any indications that unlawful agreements were made."
Mark Fuller, head of the office, told a news conference in Berne that while there were no indications of unlawful acts, the office had to investigate whether the withdrawals in the last few days had been voluntary or in exchange for promises.
The Swiss authorities said they would make a decision on the next step by the beginning of December.
Germany's T-Mobile International AG, a unit of Deutsche Telekom AG (FDTE); Norway's Telenor Mobile Communications AS; Hong Kong's Hutchison 3G Europe, owned by telecom-to-property conglomerate Hutchison Whampoa Ltd., and Cablecom Management AG all said late last week they wouldn't take part in the auction after earlier indicating their intention to be involved.
Sunrise Communications AG told the regulator Sunday that it was withdrawing from the auction following its merger with diAX AG.
"Virtually all candidates have undergone major changes in structure and ownership in the last few days. This may affect the competition framework today and in the future on the Swiss market," the Swiss telecom office said.
Telecom officials were considering whether to hold the auction at a later date, call a new auction, or allocate the licenses to the four candidates. A spokesman for the office said on Friday, when there were still expected to be five bidders, that the office was consulting with its lawyers over whether to call off the auction if the number of companies participating fell to four, or award the licenses at the auction start price of 500 million Swiss francs ($880 million).
The office said Monday it would have to consult with Swiss competition regulators over the "question of appropriate competitive independence of the candidates."
Swisscom mulls legal action
Swisscom AG, the former state-owned monopoly and one of the four remaining would-be bidders, said it would consider legal action if the authorities use any other procedure for selling the licenses besides restarting the auction that was planned for Monday.
"We had prepared everything to be one of the winners in the auction. Now, one hour before, the Swiss authorities stop and say, 'Wait, maybe we can get more money from another procedure,'" Claude Georges, head of Swisscom's project UMTS told CNNfn.com.
The other remaining would-be bidders are dspeed AG, France Telecom SA's 85-percent owned Orange Communications SA and Team 3G, a company backed solely by Spain's Telefónica SA after Finland's Sonera and Australia's One.Tel pulled out.
Shares in Swisscom were up 0.7 percent at 420 Swiss francs and British Telecommunications Plc (BT-A) rose 0.8 percent to 705.5 pence in late morning trade. France Telecom (PFTE) was down 2.2 percent at  105.6 and Vodafone Group Plc (VOD) fell 1.8 percent to 240.5 pence.
Pre-auction merger frenzy
Sunrise backed out of the auction after Tele Danmark A/S said it was spending $2 billion in a series of deals that would result in the merger of Sunrise and diAx.
The Danish telecom firm said it will increase its stake in Sunrise to 89 percent from 44 percent by buying British Telecom's entire 34.4 percent stake and half of the Swiss federal railway's stake and half of the stake held by bank UBS AG. Tele Danmark also said it was buying 70 percent of diAx.
The deals were just the latest in a spate of transactions ahead of the auction aimed at deciding who will provide high-speed wireless applications in the relatively small but well-heeled Swiss market of 7.3 million people.
Swisscom struck an alliance with Vodafone Group PLC last Wednesday in which the British operator will get a 25 percent stake in Swisscom's mobile telecom unit for 4.5 billion Swiss francs.
The same day, France Telecom took majority control of Orange Communications SA by buying the 42.5 percent stake owned by Germany's E.On AG
In other European auctions of UMTS licenses, Italy raised about 12 billion, roughly half of what was expected, after Blu, a mobile-phone operator part-owned by British Telecommunications PLC (BT-A), withdrew from the auction last month after two days of bidding amid disagreements between BT and its Italian partners.
Germany raised 51 billion ($43 billion) in August and Britain generated 38 billion in April.
--from staff and wire reports 
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