PARIS (07/06/2000) - At the last minute, two bidders pulled out of Thursday's auction for licenses to operate third-generation (3G) mobile telecommunications networks in the Netherlands, leaving the five existing mobile network operators and one newcomer chasing the five licenses.
Bidding got off to a slow start, compared to the bidding frenzy in the recent auction for licenses in the U.K., which raised US$35 billion. At the end of the ninth round on the first day of the auction, total bids for the Dutch licenses stood at just 101.1 million guilders (US$43.7 million).
VersaTel 3G NV, the only one of the six remaining bidders without a second-generation mobile network of its own, has doubts about the fairness and competitiveness of the auction, following the departure of Hutchison 3G Netherlands BV and Nogenta Swedish Acquisition Holding BV (NTL Nederland, a subsidiary of NTL Inc.), which withdrew from the auction Wednesday.
"Given the nature of the auction as it stands today, we doubt businesses or consumers will be allowed an alternative to the incumbent provider," said Raj Raithatha, current chief financial officer and recently nominated chief executive officer of VersaTel Telecom International NV, the parent company of VersaTel 3G, in a statement Wednesday.
There were, however, no such doubts at the Directorate General of Telecommunications and Post, a division of the Ministry of Public Works and Water Management and the organizer of the auction.
"There are no problems with it at all. We have five licenses and six bidders; there is still competition," DGTP spokeswoman Lilly Van Geest said.
The Ministry is auctioning five licenses to use radio spectrum to operate mobile multimedia networks. Two of the licenses -- known as A and B -- give the right to more spectrum, and hence the capacity to serve more simultaneous users, than the others -- C, D and E.
In addition to VersaTel 3G, the other remaining bidders are 3G Blue BV, a subsidiary of Ben Nederland Holding BV (a joint-venture of Ben and T-Mobil AG), Dutchtone Multimedia BV, KPN Mobile Netherlands BV, Libertel NV (a subsidiary of Vodafone Airtouch PLC) and Telfort Holding NV.
At the end of the ninth round of bidding, the highest bid was 100 million guilders from Libertel.
But the other licenses are going for bargain-basement prices: 400,000 guilders bid for License E by Versatel 3G; 300,000 guilders for License C by Dutchtone Multimedia; 200,000 guilders for License D by 3G Blue, and 200,000 guilders for License A by Telfort.
Raithatha said Versatel felt responsible for the success of the auction, adding that the company would put up a fight: "We would... not like to see that we end up with nothing whilst other players get their licenses for free."
If Versatel does fold early, then the Dutch public stands to lose out on a substantial windfall. The government has already agreed that the proceeds of the auction will be used to pay off the national debt. The interest released will be added to the Economic Structure Enhancing Fund (FES).
The progress of the auction can be tracked on the Web at http://www.veilenvanfrequenties.nl/biedingenUMTS/index_e.html