After eight weeks and 150 rounds, NTL Mobile said enough and dropped out of the U.K. government auction for five Universal Mobile Telecommunications System licenses. The withdrawal left only five bidders for the licenses, ending the auction that generated more than $35 billion for the British government.
The survivors included four U.K. companies-license B winner Vodafone Ltd., which bid $9.4 billion for its license; BT Ltd., winner of license C for $6.3 billion; One 2 One Personal Communications Ltd., which bid $6.3 billion for license D; and Orange 3G Ltd., winner of license E for $6.4 billion.
The only foreign winner was Canada-based Telesystem International Wireless UMTS Ltd., which won license A for $6.9 billion. License A, the largest license up for bid, was set aside by the government’s Radiocommunications Agency for a newcomer in hopes of stimulating increased competition in the domestic phone market.
The auction began March 6 with 13 bidders vying for the five third-generation mobile spectrum licenses. As the bids quickly reached higher-than-anticipated levels, competitors dropped out, finding little chance of making money on such huge investments. By the final week, only six competitors remained, until NTL Mobile, a joint venture between NTL and France Telecom, finally relented.
“We entered the auction with a robust business plan for offering fixed and mobile services,” said Barclay Knapp, president and chief executive officer of NTL. “We still believe in that plan, but now believe that other strategies for achieving it offer higher and better rates of return for our stakeholders.”
The British government was pleased with the world’s first 3G spectrum auction and noted consumers in the United Kingdom would be among the first in the world to reap the benefits of 3G technology.
“The outcome of this auction supports the government’s commitment to early licensing of 3G and to increasing competition in the U.K. mobile telecoms market,” said Stephen Byers, secretary of state for trade & industry. “It will ensure the U.K. maintains its position as a world leader in mobile telephony, and is a vital step toward our goal of making the U.K. the best place in the world for e-commerce.”
The licenses, which are to take effect in 2002, are good for 20 years and require payment to be completed during the first 10 years.
TIW noted it plans to finance the purchase of its license via a loan facility jointly arranged by Chase Manhattan plc and HSBC.
