Italian Government Posts 3G Auction Rules

ROME (07/31/2000) - The Italian government today published the rules for the auction of five third generation (3G) mobile phone licenses, setting a minimum for the first bid of 4 trillion lire (US$1.9 billion) and fixing a minimum figure of 200 billion lire for subsequent increases in the first 10 bidding rounds.

Companies wishing to participate must apply by Aug. 10, paying a deposit of 5 billion lire and producing bank guarantees for 4 trillion lire, according to the official document posted on the Web sites of the prime minister's office and of the communications ministry.

The bidding process is due to begin in September, following the presentation of the participants' business and technical plans by Sept. 11, the document said.

Successful candidates must make an immediate down payment of 4 trillion lire and can then pay the rest of the bid in annual installments for a maximum of 10 years, it said.

Seven consortia have so far expressed interest in bidding for the licenses to operate a UMTS (Universal Mobile Telecommunications System) service in Italy.

These are the companies competing against the three holders of existing cellular licenses: Telecom Italia Mobile (TIM) SpA; Omnitel Pronto Italia SpA, and Wind SpA have created Blu SpA, in which British Telecommunications PLC has a 20 percent stake; Dix.it, backed by the Agnelli family holding company IFIL SpA, Pirelli SpA and Banca di Roma; Andala SpA, led by the Sardinian Internet company Tiscali SpA; and Atlanet SpA, with the participation of Spain's Telefonica SA.

The Italian government expects the auction to raise at least 25 trillion lire for state coffers, but it is impossible to predict the final outcome of the competitive bidding, a communications ministry spokesman said. The issue as to whether and when "virtual operators" will be allowed to offer services using the networks created by the license winners has yet to be resolved and is the responsibility of the Communications Authority, he added.

"Those who say the era of UMTS is destined to have a profound impact on the economy and customs of our society are certainly right," Communications Minister Salvatore Cardinale said in a prepared statement. "We expect the competition to produce the results that are the most profitable for our public finances and for the modernization of our industrial system."

The communications ministry can be contacted in Rome on tel. +3906 5444 9669 or http://www.comunicazioni.it/.

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