Eight Companies Seek Italy's 3G Licenses

The surprise entry of an unknown consortium, Anthill SpA, raised the number of contestants vying for Italy's third-generation mobile phone licenses to eight when the deadline for applications passed at noon today, the Italian Communications Ministry said. The Italian government will award five licenses.

The Anthill consortium is led by International Last Mile SpA, a telecom company based in the southern town of Matera, Italian media reported. It is backed by a group of companies that operate in southern Italy, specifically in the provinces of Basilicata and Calabria, a Communications Ministry spokeswoman said.

Anthill's chairman, Attilio Caruso, declined to give details of the consortium's makeup but said it was in advanced negotiations with several foreign companies. Some of the group's backers are active in the information technology, telecommunications and insurance sectors, news agency reports said.

The group drew inspiration for its name from the cooperative approach to labor of ants, Caruso, who is also the chairman of the Banca Popolare del Materano, told the ANSA news agency. An ANSA reporter who visited the Matera headquarters of International Last Mile this afternoon found the offices deserted.

The newcomer will have to compete with four strongly-established mobile phone operators and three other challengers. The established operators are Telecom Italia Mobile (TIM) SpA, which today announced it had more than 20 million subscribers in Italy; Omnitel Pronto Italia SpA, controlled by Vodafone AirTouch PLC; Wind SpA, an alliance between France Telecom SA and the Italian electricity utility ENEL SpA; and Blu SpA, backed by British Telecom PLC.

One of the new entries is Ipse 2000, backed by Spain's Telefónica SA and Finland's Sonera Group. Among its Italian partners are the Fiat SpA automobile group, the Agnelli family holding company IFIL SpA, the Rome utilities company ACEA SpA and the Banca di Roma SpA.

Andala SpA, another new entry, is a consortium put together by Renato Soru, the founder of the Sardinia-based Internet and telecom company Tiscali SpA. It is backed by the San Paolo IMI bank and by Carlo De Benedetti's CIR SpA and recently obtained a significant boost to its financial muscle with the arrival of the Hong Kong conglomerate Hutchison Whampoa. Hutchison withdrew from the costly German mobile phone competition, reportedly to concentrate its efforts on the Italian UMTS (Universal Mobile Telecommunications System) auction.

Also competing is ATI SpA, based in the Sicilian city of Catania and backed by Tu Tlc Utilities SpA and a number of municipal utilities companies. Like Anthill, it has said it is in discussions with potential international partners.

The Communications Ministry will rule on the suitability of the applications by September 2. Those accepted will be invited to submit business plans by September 11. The competitive bidding phase is expected to begin early in October, the ministry said in a statement. The government has set the minimum bid at 4 trillion lire (U.S.$1.86 billion), with bidders required to raise their bids by a minimum of 5 percent for the first 10 rounds and subsequently by at least 2 percent.

The Italian auction is unlikely to reach the levels seen in Germany and the U.K. because of the dominant position of TIM and Omnitel in the existing GSM market, which between them control 90 percent of the market, analysts said. In Germany the sale of the six licenses raised US$45.6 billion for state coffers, while in Britain five licenses generated a revenue of US$33 billion.

Italy's five licenses will be awarded at the beginning of December 2000, the Communications Ministry statement said.

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