Telefonica Drops Out of U.K. Mobile Auction

LONDON (04/18/2000) - And then there were six. Telefonica SA yesterday became the latest to crack under the pressure and dropped out of the U.K. auction for third-generation mobile licenses. The combined high bids for the five licenses available now total 21.2 billion pounds (US$33.56 billion)Of the seven companies still in the bidding at the beginning of the day yesterday, the Spanish telecommunications company was the only one that had earlier let its poker face slide. It used two of the three passes allowed under the auction rules in the rounds leading up to the 106th. Then in round 106, the company used its single chance to call a one-day recess. [See, "Telefonica Hedges as 3G Stakes Increase in U.K.," April 7.]Now there are only six companies remaining in the bidding for the five licenses, according to the auction's official Web site. They are competing for the five 20-year, 3G licenses to operate networks based on the UMTS (Universal Mobile Telecommunications System) standard. In addition to voice, the 3G networks are designed to provide data rates of up to 2M bps (bits per second).

License A, reserved for new entrants to the U.K. mobile communications market, and License B, reserved for an incumbent operator, are the most sought-after of the licenses, as they also offer additional radio spectrum compared to the other three licenses, open to all comers.

At the beginning of round 134 this morning, TIW UMTS (UK) Ltd., a subsidiary of Canada's Telesystem International Wireless Inc., is the current high bidder for License A, with a bid of 4.38 billion pounds.

Incumbent carrier Vodafone AirTouch PLC leads the running for License B with a bid of 5.66 billion pounds.

The high bid for License C is currently NTL's 3.76 billion pounds; One2One has the current highest bid for License D, at 3.68 billion pounds; and bidding for License E is led by BT3G, the bidding arm of British Telecommunications PLC, at 3.74 billion pounds.

Incumbent Orange PLC, the only one of the remaining six without a winning bid in at the moment, is the only company eligible to bid in the next round of the auction.

More information on the auction, including the most recent bids and a round by round recap, can be found on the Web at http://www.spectrumauctions.gov.uk/.

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