Monday November 13, 3:14 pm Eastern Time
Forbes.com
Around-The-Globe: Swiss 3G Auction Cancelled
By Todd Jatras
The Swiss government cancelled its third-generation wireless auction today after failing to round up enough willing participants to compete for four 3G licenses. Bidding was supposed to begin this morning and was expected to net between $4 billion and $5 billion, but it will most likely go for the established minimum of about $28 million per license, a net of just more than $110 million.
An original slate of ten bidders was whittled down to five on Nov. 10, when the Swiss Communications Department (Bakom) announced that Hong Kong-based Hutchinson Whampoa and Norway's Telenor Mobile Communications had dropped out of the competition.
The final blow came today when two of the remaining participants, Switzerland's Diax and Sunrise, agreed to be bought and merged together. TeleDanmark has agreed to take an 89% stake in Sunrise by buying British Telecommunications' (NYSE: BT - news) 34% stake in the company for $656 million. TeleDanmark will pay approximately $1.33 billion for a 70% stake in Diax, which it is buying from SBC Communications (NYSE: SBC - news) and two units of Credit Suisse Group.
The Swiss auction is the third controversial European auction in a row. In October, Italy's 3G auction had to be closed after only a couple of days when Blu, a consortium of companies led by British Telecom, dropped out after a disagreement between shareholders. Austria's auction earlier this month was also a disappointment.
Bakom announced that it was launching an investigation into whether unlawful agreements were struck between the companies, and is holding out hope the auction can be restarted in early 2001. Unless it can demonstrate that some type of collusion has taken place between participants, the Swiss government will be stuck with the paltry minimum price.
The major telecoms competing to offer next-generation wireless services in Europe have increasingly displayed a horse-trader mentality among themselves that is quickly short-circuiting the auction process. In addition, major players like Deutsche Telekom (NYSE: DT - news), AT&T (NYSE: T - news) and British Telecom decided not to participate in the Swiss auction, citing rising debt levels from earlier auctions in Germany and the U.K. as the reason why.
Future auctions slated for Belgium, Poland, Ireland, France and Denmark appear to be in serious jeopardy following this latest round of European 3G high jinks.
See:
Deutsche Telekom on the Forbes International 800
British Telecom on the Forbes International 800
TeleDanmark on the Forbes International 800
Go to www.forbes.com to see all of our latest stories. |
