Bidding war for new mobile licences increases to £7.35bn

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The Independent Online

The Government's auction of next-generation mobile phone licences racked up an additional £1.0bn as the total amount bid soared yesterday to £7.35bn.

And despite the unprecedented amounts on offer, the sums involved are certain to rise even further since among the 13 bidders in the auction none has waived a chance to bid or requested a recess day.

Vodafone and WorldCom, among the world's top three telecoms groups by market value, retained their places at the top of the auction yesterday, which now has gone 82 rounds.

The Anglo-American mobile giant remained the top bidder overall with an offer of £1.66bn for licence B, which offers the greatest amount of spectrum to the four incumbent mobile players. WorldCom continued in top spot for licence A, which offers the most spectrum and is reserved for a new entrant, with a bid of £1.53bn.

Although BT Cellnet, the country's number two mobile operator, hasn't waived a bidding round, it seemed well back in the pack yesterday afternoon. Analysts noted, however, that the company's bid strategy could see it emerge aggressively as the auction enters its late rounds.

"What you're seeing is the amount for licence A being bid up because there is an expectation that all four incumbents are going to win licences," said an analyst. "The overpaying issue isn't so serious for existing operators because their existing customer base gives easy and profitable migration capability."

However, Orange was the only other incumbent operator to be in pole position for a licence yesterday. It prevailed with £1.48bn bid for licence E, which offers the least amount of spectrum.

Similar amounts were on offer for licences C and D.

3GUK, a subsidiary of Eircom, was in top spot for licence C with a bid of £1.35bn, while NTL Mobile, a division of the cable group, was ahead in the auction for licence D with an offer of £1.34bn.

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