Swiss postpone mobile licenses auction after bidders dwindle

Swiss officials have postponed indefinitely the auction of four licenses to operate new-generation mobile telephone services after so many bidders pulled out the element of competition was lost.

Swiss officials have postponed indefinitely the auction of four licenses to operate new-generation mobile telephone services after so many bidders pulled out the element of competition was lost.

The decision came as BT sold its 43 per cent stake in Sunrise, one of the bidders for a license, to TeleDanmark for £460m.

Officials called off the bidding planned for Monday when two of the remaining five contenders for the licenses told them about their plan to merge, the government said in a press release.

The merging companies, Diax AG and Sunrise Communications AG, called a joint news conference for later today to detail their plans.

Prospects for the auction had already been dwindling after initial projections that it would bring in between 2 and 3 billion francs ($1.13 - $1.69 billion).

But those projections, based in part on the multibillion-dollar windfalls scored by the British and German governments from their license sales earlier this year, had already been dampened by disappointing results in other countries.

The Swiss government said it would check if any companies illegally conspired ahead of the auction.

Apart from Diax and Sunrise, the auction's bidders were to be Spain's Telefonica SA, the consortium of Swisscom AG and Vodafone Group PLC and the combination of France Telecom and Orange.

"Almost all candidates for a license have significantly changed their corporate and ownership structures over the past few days," the Swiss government said in a statement.

The changes will affect current and future competition in Switzerland, the statement said. The government said it would consider its options before deciding how to proceed.

The auction for the 15-year licenses was already put in doubt late last week when four bidders said they were no longer interested. One of the 10 companies originally cleared to bid already had withdrawn in October.

The Swisscom-Vodafone connection developed only last week. The Swiss government announced that Britain's Vodafone AirTouch would take a 25 per cent stake in the mobile operations of Swisscom, which itself was spun off from the old government-owned PTT. France Telecom doubled its stake in Orange to 85 per cent.

Switzerland, with a population of 7.3 million, is one of Europe's smaller markets, but also is wealthy and potentially lucrative with widespread use of the current generation of cellular phones.

Last month Swiss authorities were forced to put off an auction for licenses to operate current-generation mobile phone services after withdrawals left only the three existing operators in the bidding for three new concessions.

Diax is jointly owned by Swiss electricity companies, Swiss Reinsurance Ltd., Winterthur Leben, a unit of Credit Suisse Group, which together hold 60 per cent, and by SBC Communications Inc. of the United States.

The owners of Sunrise include BT (BTY) and TeleDanmark A/S (K.TLD), as well as the Swiss bank UBS AG (UBS) and the Swiss Federal Railway.