3G auction in doubt (no punters? what does that mean?)
By Michael Sainsbury, iTnews
Monday, 5 February 2001
Australia’s great 3G spectrum auction is in doubt just one week before bidders are due to register for the $2.4 billion spectrum sale, with the government admitting that low interest in the sale could spell a delay.
A pall has descended on 3G auctions worldwide, following the postponement of auctions in the US, France and Brazil over the past week. Locally, there are doubts about enough punters turning up to the 3G auction scheduled for March.
“The ACA will advise us if an auction is not viable,” said a spokesperson for Communications Minister Senator Richard Alston. “Then we would need to review the process. There then might need to be a delay,” he said.
“The primary consideration of this office is the efficient allocation of spectrum to consumers. However the government does have an overarching responsibility to taxpayers to get the most appropriate value from the sale of assets [such as spectrum].”
Federal Treasurer Peter Costello is looking for around $2.4 billion from 3G in order to nail last year’s budget forecast of $2.6 billion flowing from spectrum auctions.
The Australian Communications Authority, which runs the auctions, insists they will go ahead in March as outlined last year.
When asked if the sale would be going ahead as planned, ACA marketing manager David Brumfield said “absolutely.” The cut date for participants to lodge their intentions to bid at the 3G auction is February 12.
However, the ACA already has fall back plan if there are not enough participants to make an auction viable.
Brumfield said that if there were not enough interest for an auction, the ACA would offer sale hopefuls the parcels of spectrum they wanted at a minimum price - industry sources have indicated that figure is around the $500 million mark. The ACA has four full national licences to sell. In the absence of an auction, and if it were able to flog all four licences, the ACA would garner $2 billion for the government - $400 million short of Costello’s target.
While the ACA remains convinced that some sort of 3G sale will go ahead in March, the government is less certain, with Alston’s office indicating the sale may be stalled until market conditions become warmer.
Just who will participate in the auctions is uncertain, particularly given the current and ongoing sale process of number two mobile player Optus, and public admissions of non-participation by newcomers One.Tel and Hutchison/Orange. This could thwart the government’s aim to have at least five contestants in the field. Only Telstra and Vodafone look like certain runners, and even if Optus and even Telecom New Zealand front up for the start, the likelihood of another participant and any real competition is fading.
In an early sign the government was getting worried about a hole in its budget, the Australian Communications Authority tapped Deutsche Bank as advisers to the sale. That team is now on a roadshow around Australia and Asia to drum up interest in the spectrum but the February 12 deadline for registering for the auction is close and no other prospective bidders have emerged.
Brumfield said that there had been “interest” from Asia but he “did not know” whether this would translate into registered bidders.
One.Tel joint CEO Jodee Rich last week cited an estimated $ 3 billion network cost as one of the main reasons his company is steering clear of the sale. Rich said the only “third generation” service that cannot be offered on current 2.5 generation networks is video, and this is so bandwidth hungry as to be almost impractical.
It is thought that Telstra will buy its full share at the ACA nominated figure, no matter what - thereby setting a price. Any remaining spectrum would be left on the table and available off the shelf to interested operators.
The international news comes in the wake of a string of disappointing financial results by telecommunications operators and equipment vendors following last year’s crash in share market prices for those companies.
In delaying a US 3G sale, The US Federal Communications Commission said that it "believes that a brief delay is warranted to provide additional time for bidder preparation and planning and for reasons of auction administration."
The French government had to pull its auction last month after only two bidders put their hands up for four available spectrum licences.
“If bidders nominate for the auction before February 12, they must then lodge a deposit by February 19 which will be concomitant on the amount of spectrum they want. A full-sized national licence would require a refundable deposit of $141 million, Brumfield said.
itnews.com.au |
