Germany's marathon auction for third generation mobile phone licences finally ended yesterday with final bids reaching a total of 98.8 billion deutschmarks (€50.15 billion).
The six successful consortiums included: Deutsche Telekom subsidiary T-Mobil; Vodafone's Mannesmann; E-Plus Hutchison; and BT-backed Viag-Interkom. Also successful were France Telecom-backed reseller MobilCom and the Spanish-Finnish G3 group.
On offer in the government-sponsored auction were 12 frequency blocks in the Universal Mobile Telecommunications System (UMTS) that has a transmission speed almost 40 times faster than the existing GSM standard.
A two-frequency block is the minimum requirement for a UMTS licence but three frequencies are necessary to build a national network.
The auction ended following the surprise decision by T-Mobil and Mannesmann to abandon their attempts to secure a three frequency packet each and instead settle for just two frequencies.
Faced with an expensive now-in situation, other bidders such as Viag and E-Plus had already said in previous days that they were lowering their sights to focus on securing just two frequency blocks.
Mobilcom said yesterday evening that it was "satisfied with the acquisition of the cheapest licence - in a consortium with France Telecom for DM16.37 billion. The second cheapest licence went for DM16.45 billion. to the 3G consortium, comprising the Spanish Telefonica and Finnish Sonera.
Deutsche Telekom subsidiary T-Mobil paid DM16.58 billion for its licence and Viag-Interkom paid DM16.52 billion.
But that price proved too high for one Viag shareholder, Dusseldorf energy concern E.ON. It announced shortly after the auction ended that it was getting out of the mobile phone business and selling its 45 per cent stake in what is Germany's smallest mobile phone company.
It will sell the share to British Telecom, early next year for an estimated DM13 billion (£5.2 billion), giving BT a 90 per cent stake. BT chief Sir Peter Bonfield announced in London yesterday that the company now intended to take control of Viag by exercising its right to purchase the remaining 10 per cent of the company from minority shareholder Telenor of Norway. With the first auction over, a second round will now begin, offering five more frequency blocks that will permit successful bidders to expand their capacity by allowing data transfers in one direction.
Though flush with cash, German finance minister Mr Hans Eichel yesterday reiterated his intention to use the proceeds of the auction prudently.
The money saved on interest payments - estimated at DM5 billion - would be used for new government investment in transport and education, he said.
There has been huge interest in UMTS technology from telecoms companies around Europe with the auction in Britain earlier this year raising £29 billion sterling (€47.5 billion) for the British Treasury.
The interest is fuelled by the expectation that this third generation of mobile phones will open the door to so-called "mcommerce", allowing people to use their mobile phones to pay for goods and services.
France, Britain and the Netherlands have already secured tenders for UMTS licences, while Italy, Belgium and Switzerland are holding auctions in the next three months. Ireland will follow France's example in the autumn and hold a "beauty context" instead of an auction, looking at the merits of each candidate rather than the amount of money they are prepared to pay.
