Bid total in German mobile auction rises to £26bn

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The Independent Online

The bid total in Germany's auction of next-generation mobile phone spectrum reached £26bn yesterday, amid indications that five telecoms groups will eventually be awarded licences.

The bid total in Germany's auction of next-generation mobile phone spectrum reached £26bn yesterday, amid indications that five telecoms groups will eventually be awarded licences.

As six companies continued to contest the frequency auction, E-Plus-Hutchison signalled its intention to bid for the minimum number of two spectrum blocks. With 12 blocks available, industry watchers believe Vodafone's subsidiary Mannesmann Mobilfunk and Deutsche Telekom's T-Mobile, the German mobile market leaders, will buy three blocks each, leaving six to be split among three other companies.

A spokesman for the consortium combining the Dutch carrier KPN Telecom, Hong Kong's Hutchison Whampoa and NTT DoCoMo of Japan said: "The price of the bids no longer makes it worth our while to try to control the number of competitors in the market via the number of spectrum blocks." The same group controls the British next-generation mobile licence reserved for a new market entrant.

Unlike Britain's auction, which raised £22.5bn from selling five preset frequency bands of varying capacity, the German auction offers bidders 12 equal bands of capacity. The proviso is that bidders must win at least two bands to offer a service, with any one company limited to owning three bands. This greater spectrum capacity is expected to allow operators to offer more extensive mobile video and other "always-on" internet services.

T-Mobile, at the end of yesterday's round 149, had bid £6.65bn for three blocks of spectrum. However, Mobilfunk ended yesterday's bidding with the leading position for just one band with a bid of £2.21bn.

Viag Interkom, which is the smallest of Germany's four mobile services and is 45 per cent owned by British Telecom, and Mobilcom, a capacity reseller backed by France Telecom, are expected to join E-Plus-Hutchison in sharing the remaining six frequency bands.

Viag Interkom bid £4.34bn for two frequency blocks, while Mobilcom bid the same amount for two other blocks. Group 3G, backed by Finland's Sonera and Telefonica of Spain, has bids of £4.37bn on the table for two blocks, while E-Plus Hutchison offered £4.25bn for two frequency blocks.

Worries about the rising licence sums in the German auction, which are now set to surpass £30bn, saw BT shares slide 4p to 830p, a 20-month low. Vodafone, however, gained 3.5p to close at 280p.

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