|
France faces $5B shortfall
|
 |
February 2, 2001: 8:15 a.m. ET
Government set to slash cost of new mobile phone licences by up to 25%
|
LONDON (CNN) - France will slash the cost of third-generation mobile phone licences, to attract the required number of bidders, analysts said on Friday.
The French government had expected to raise about $19 billion from the sale of four high-speed mobile phone frequencies, that give telecom operators the opportunity to offer high-speed data services on handsets.
That bidding process fell apart earlier this week when cellular operators balked at the huge cost of each licence. Now, analysts expect the government will cut the cost of the licences.
"The French will have to make a significant about-turn by reducing the $4.7 billion asking price by about 20 to 25 percent," Declan Lonergan, director of wireless/mobile in Europe at consultant Yankee Group, told CNN.com. "They won't go much lower than that, that would be a serious loss of face."
France joins a long line of troubled licence sell-offs. Italy, Poland, Switzerland and Austria, all failed to raise the substantial amounts they had expected after telecom operators spent more than  110 billion to date on earlier 3G licences.
Britain garnered $35 billion and Germany raised $50 billion – the only countries to score substantial success because they were first to hold their auctions.
Europe's telecom companies have taken on heavy debt and seen credit weightings come under pressure in their attempt to build a European foothold.
"These companies have come under a lot of pressure from investors because of the huge debt burden," Lonergan said. "Companies don't want to pay these huge prices anymore."
France's number three mobile operator Bouygues Telecom, was one of the companies that pulled out of the beauty contest, calling the asking price a "fatal tax."
Other companies that withdrew from the auction included the Telefonica-backed contestant Suez Lyonnaise, Dutch group KPN, Hong Kong's Hutchison Whampoa and Deutsche Telekom.
Still, ports-to-telecom conglomerate Hutchison Whampoa, Deutsche Telekom and Bouygues Telecom all said on Friday they would consider re-entering the fray if the terms were improved.
French Industry Secretary Christian Pierret said the $4.7 billion paid by the winners of the first round could be up for review.
"We could in fact (reconsider) several parameters in the second round that we are going to launch in a few months: the duration (of the licence), the cost, the timetable," Pierret said.
Only France's two biggest mobile phone companies were left in the running when the deadline for bids closed on Wednesday: Vodafone Group-backed Vivendi Universal and France Telecom.
--from staff and wires 
|
|
|
|
|
 |
|
