France extends 3G licence bidding

The French government last night said it would hold a further contest to try to ensure that it sells all four of the UMTS third-generation mobile phone licences. By yesterday's deadline only two companies had put in firm offers, leaving two licences unspoken for.

The French government last night said it would hold a further contest to try to ensure that it sells all four of the UMTS third-generation mobile phone licences. By yesterday's deadline only two companies had put in firm offers, leaving two licences unspoken for.

France offered four high-speed 3G mobile licences at a fixed cost of 4.9bn euros (£3.1bn) each. The 15-year licences were to be awarded via a beauty contest. The winners would each receive the same amount of radio spectrum.

Of the licence fee, 25 per cent was due to be paid when the licence was awarded and 25 per cent a year later, with the rest spread over the remaining 13 years of the licences.

However, at yesterday's deadline only two companies were left in. France Telecom, which owns Orange, and Vivendi, which owns the mobile phone firm SFR, both put in firm offers.

The other two licences are still up for grabs after Bouygues Telecom pulled out on Tuesday and a consortium including Spain's Telefonica Moviles and Suez Lyonnaise des Eaux dropped out last week. The winners were to be announced at the end of May and the licences awarded at the end of June.

The French government, which hoped to raise 20bn euros, has been criticised by potential bidders, who said the fixed price of the licences was too high. Observers reckon the French government may be forced to offer sweeteners to contenders to make the licences attractive.

This could include reducing the price or offering 15-year licences at the same price. If the government failed to attract four bidders, the remaining spectrum could be shared among those committed.