Singapore delays 3G auction, sweeteners likely
January 3, 2001 4:52am
Reuters
By Jacqueline Wong
SINGAPORE, Jan 3 (Reuters) - Singapore's delay in auctioning third generation (3G) telcom licences highlights waning appetite among global players after overpaying in Europe and may prompt the government to offer sweeteners to entice operators.
Regulator Infocomm Development Authority of Singapore (IDA), which has been on marketing trips to as far as Europe, had planned to release auction rules by the end of last year and to hold the auction in February.
It has now postponed the auction to the second quarter from the first quarter because telcos had asked for more time to study the auction rules.
``The change in the schedule was due to interest received from telcos during our marketing efforts, and their request for more time to be consulted on the auction rules and procedures,'' said Dulcie Chan, spokeswoman for the regulator.
She said it was premature to speculate if the government was prepared to make any changes to the auction process.
``The documentation on the 3G auction rules and related policy issues will be issued later this month,'' she said.
Singapore said last October it would auction four new 3G licences and set S$150 million as a reserve price for each of the licences, which would be valid for 20 years.
``The S$150 million reserve price is probably looking a little aggressive given the 3G auction fatigue we saw in Europe last year,'' Gillem Tulloch, Nomura's head of South Asia telecoms, said, noting that the rules could well be amended.
The next generation of mobile phones is expected to offer Internet access, full-motion video and CD-quality sound. Hopes that millions of subscribers were willing to pay for such services helped drive the bidding frenzy in Europe that ended with telcos paying more than $100 billion for the licences.
NO SURPRISES
Analysts said IDA, which had earlier said it wanted foreign participation in 3G licences, probably had difficulty attracting global telcos to the auction because of Singapore's tiny market.
The lack of interest was also compounded by problems of huge debts run up by many European operators, such British Telecommunications, after bidding record prices for the licences in Britain, Italy and Germany last year.
Kim Eng's research chief Seah Hiang Hong said the issue was whether Singapore could attract foreign participation. Not many overseas players had stepped forward so far.
``The major players in the market are quite stretched, even the Bank of England has warned of rising debt for telecommunication companies,'' he said.
Singapore might need to review the auction rules, such as an upfront lump sum payment for the licence fees.
``Government policy should be flexible,'' he said.
The government could also consider auctioning one licence first instead of four.
``By auctioning off one licence you're allowing the market to effectively attach a benchmark valuation to the frequency, that's how much it's theoretically worth,'' Tulloch said.
OPERATORS DISAPPOINTED
Singapore's three phone operators, which had said they would participate in the auction, refused to speculate on the reasons for the delay.
Neil Montefiore, MobileOne's (M1) chief executive, said the company had not been officially informed of the delay.
``We would be disappointed if there is indeed a delay in the 3G auction as we have been making all the necessary preparations based on the earlier date announced,'' he said.
M1 is a venture between Keppel Telecommunications & Transportation, Singapore Press Holdings, Cable & Wireless and Pacific Century CyberWorks.
Patricia Sharma, StarHub's assistant vice-president (marketing), also echoed the disappointment as planning and regulatory certainty were crucial.
``We haven't heard any more news. We are disappointed with what's happened,'' she said.
The StarHub consortium comprises Singapore Technologies, Singapore Power, British Telecommunications Plc and Japan's Nippon Telegraph and Telephone Corp.
But incumbent operator Singapore Telecommunications Ltd said the development would not affect its plans.
``The team has already drawn up our 3G business case for Singapore and would have been well prepared for a February auction,'' Lucas Chow, chief executive of SingTel Mobile, said. ^ REUTERS@
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