TIW, a Canadian telecoms group, yesterday made an aggressive start to the auction for the next generation of mobile telephone licences, and predicted the process would raise more than £6 billion sterling for the UK government. The Montreal-based company leads the field of 13 groups competing for the third generation licences after bidding £170 million on the first day of an auction expected to last several weeks.

The strong opening bid and the suggestion from TIW that the five licences on offer would fetch an average of more than £1 billion each signals a more competitive and expensive contest than expected.

Mr Philipp Huneault, vice president of new ventures for TIW, said the company's opening offer "demonstrates our strong determination to win". He said: "The total value of these licences could reach £6 billion."

When the British government announced plans to auction spectrum to allow the introduction of UMTS universal mobile telephone services the Exchequer was originally expecting to raise about £1.5 billion from the sale. By the start of the auction, analysts were forecasting an average price of £700 million each.

All 13 groups registered for the auction submitted a bid yesterday, but most opted for the reserve prices. Rival bidders dismissed TIW's early start. Vodafone AirTouch, the UK-based mobile operator, would only say: "We expect the auction to be a long affair."

TIW is one of the lesser known participants. In the UK it runs the Dolphin network, a low-cost public service radio communications system. It also has mobile operations in Brazil and the Czech Republic.

The company's £170 million for Licence A, which is only available to a new entrant and offers the broadest package of airwaves, was well ahead of other bidders in its category.

WorldCom, the US telecoms group which is expanding in Europe, bid £125.1 million, just above the reserve price of £125 million.