Hutchison, Europolitan Win Swedish Mobile Licenses; Telia Loses
By Linda Andersson
Stockholm, Dec. 16 (Bloomberg) -- Europolitan Holdings AB, NetCom AB and groups led by France Telecom SA and Hutchison Whampoa Ltd. won licenses to set up high-speed wireless networks in Sweden, the Post and Telecom Agency said. Telia AB, the country's former phone monopoly, missed out and said it will appeal the ruling.
Telia joins five other applicants, including Telenordia AB, a venture of British Telecommunications Plc and Telenor AS, and Reach Out Mobile, led by Telefonica SA and Sonera Oyj, to be left without a license.
Sweden gave out the licenses in a so-called beauty contest, while the U.K., Germany and some other European countries sold theirs in auctions for a combined $88 billion. Though the winners in Sweden didn't have to pay for the permits, they will pour as much as $3.8 billion each into their networks to keep their promises of providing full coverage in Sweden, a nation bigger than Germany with a tenth of the people, executives said.
``The interest has been overwhelming,'' said Nils Gunnar Billinger, head of the PTS, at a press conference. ``Sweden will have one of the best third-generation networks.''
By 2003, there will be 99.98 percent coverage of the country and some 77 billion kronor ($7.9 billion) will have been invested in the networks, the PTS said.
Orange Sverige, comprising France Telecom, Skanska AB, Bredband Mobil AB, NTL Inc. and Schibsted ASA, has estimated its total investment at 20 billion kronor. HI3G Access, the venture between Hutchison Whampoa and Investor AB, pledged to spend as much as 37 billion kronor.
Telia Missed Out
Telia lost even after vowing to pump in between 7 billion and 11 billion kronor ($729 million to $1.1 billion) on the new network. Its bid showed ``a deficiency of technical feasibility,'' the PTS said.
``We will definitely take it to court,'' said Cecilia Giertta, a spokeswoman for Telia. ``We are the only country in the world not to give the major player a license.''
To win a license to offer services based on the Universal Mobile Telecommunications System, applicants had to prove they had the funds to build a UMTS network and submit a plan for how many Swedes they would be able to serve in 2003, 2006 and 2009.
The fees charged by many other European countries have left phone companies, such as Royal KPN NV and BT, with mounting debts and falling shares. Applicants in Sweden paid an administration charge of 100,000 kronor each.
The Swedish beauty-contest procedure should let the winners inject more cash into business development and network expansion, guaranteeing that all Swedes gets UMTS technology while creating a hotbed for new services, analysts and executives said.
Nordic Foothold
Deutsche Telekom AG of Germany, which was vying for a permit in Sweden with Utfors AB and ABB Ltd., and other foreign phone companies want to get a foothold in the Nordic region to use it as a testing ground for new services, such as downloading video and music clips. More than two in three Swedes already have cell phones, above an average in Western Europe of about 50 percent.
The applicants who were left without a Swedish license can challenge the telecom agency's decision in the county court. Another way for them to grab a piece of the market would be by offering services over one of the winners' network.
Stockholm-based Ericsson AB, the largest maker of equipment for wireless-phone networks, estimates that 1 billion people worldwide will hook up to the Internet via mobile phones in 2005. In Finland, people already use their cell phones to buy drinks at vending machines and transfer money between bank accounts.
Of Swedes older than 15, about 55 percent will subscribe to UMTS services within five years after the start, the newsletter 3G Mobile said last month, citing a survey of 1,100 people commissioned by Orange. Of the potential adopters, 16 percent were willing to spend 250 kronor a month on the service, while another 39 percent would pay 200 kronor.
Costs vs Revenue
So far, the costs have been more visible than the revenue prospects. European phone companies have lost more than $700 billion of combined market value in the past nine months amid concern it will take a while before the estimated $300 billion of investments in UMTS equipment and licenses pay off.
Other applicants for a Swedish permit included Broadwave, a consortium of Tele1 Europe Holding AB, Western Wireless Corp., 3G/3P, You Communications AS and Rix Telecom AB; and a group owned by Nomura International Plc, Teracom AB and Ratos AB.
Sonera and Telefonica bid together with Sydkraft AB, a Swedish utility, and Industri Kapital, Scandinavia's top buyout firm. Europolitan is 71 percent owned by Vodafone Group Plc. |
