Two withdraw as Dutch UMTS auction starts, 6 left
(UPDATE: rewrites througout, adds analyst comments, company comments, share prices)
By Caroline Jacobs
THE HAGUE, July 6 (Reuters) - Hutchison 3G Netherlands and Nogenta Swedish Acquisitions on Thursday pulled out of the Dutch UMTS mobile telephone auction just as it began, leaving six groups in the running for five licences and fuelling hopes they will not be as expensive as expected.
``The withdrawals support our view that UMTS costs are unlikely to be as high as the market was anticipating...this is very positive for the sector,'' Bear Stearns analyst Fanos Hira said.
He said licences will probably be sold for ``a lot less'' than the 800 million euros on average each he had initially expected.
The withdrawals come as more companies join forces to bid for licenses, instead of competing against each other, and push down the costs of their investment in UMTS services.
A spokesman for (NYSE:NTL - news), which owns Nogenta Swedish Acquisitions, said the decision to withdraw was triggered by a consolidation amongst the other bidders.
France Telecom , which owns a 25 percent stake in NTL, would, in effect, have ended up bidding against itself as it owns 80 percent of Dutch mobile operator Dutchtone.
Ben, the smallest mobile operator, owned by Belgium's Belgacom [BGC.UL] and Tele Danmark , earlier this month pooled its bid with Deutsche Telekom , increasing its chances to obtain a licence.
Analysts said Hutchison 3G Netherlands' decision to pull out is as a confirmation that Hong Kong conglomerate Hutchison Whampoa Ltd , Dutch incumbent KPN Telecom NV and KPN's partner Japanese partner NTT DoCoMo will announce a joint venture to bid for UMTS licences across Europe.
HUTCHISON STILL LOOKING TO EXPAND
However, Hutchison spokeswoman Nora Yong said the decision to withdraw had nothing to do with a possible linkup with KPN and that the decision was based on a review of Hutchison's overall Europe strategy.
``We are definitely interested in Europe 3G opportunities, and we are still looking at expanding our 3G businesses,'' Yong said.
The Netherlands is the second European country after Britain to auction UMTS licences. The British auction raised 22 billion pounds ($33.22 billion) and led to investor concerns about the impact on earnings and international expansion plans.
The liklihood that the Dutch government, which last week cancelled a bond auction because of the UMTS auction, will net the 20 billion guilders ($8.70 billion) it was hoping for has fallen even further.
The opening bid required in the auction has been set at 470 million guilders ($202 million) for all licences. Bids for two of the licences will begin at 100 million guilders each, and for the remaining three at 90 million each.
INCUMBENTS TO HEAD IN
While analysts had already bet on the incumbent mobile operators to get a licence, the withdrawal of the two outsiders now looks likely prove them right.
The battle could end quickly since VersaTel , the only contender with no mobile activities, is at a disadvantage to the five existing Dutch operators, since it would have to make additional investments to gain a similar position and win subscribers.
``This is very good news, particularly for KPN and Libertel who will be competing for the two bigger licences,'' said a London-based analyst. ``And VersaTel is likely not going to be an agressive bidder.''
VersaTel has taken the government to court to request a legal review of the auction procedure, which it says is a ``closed shop'' arrangement that excludes newcomers. No one at the company was immediately available to comment on the new development.
Shares of the Netherlands' KPN Telecom rose 4.17 percent to 48.92 euros and number two Libertel added 3.89 percent to 17.35 euros, while VersaTel lost 1.43 percent to 44.65 euros.
Of the remaining six bidders, the five that already operate mobile telecoms services in the Netherlands are: KPN Mobile, Vodafone AirTouche's (quote from Yahoo! UK & Ireland: VOD.L), Libertel, British Telecoms owned Telfort (quote from Yahoo! UK & Ireland: BT.L), France Telecom's Dutchtone and Ben, which is owned by Belgium's Belgacom [BGC.UL] and Tele Danmark and is participating in the auction through 3G-Blue, an alliance with Deutsche Telekom . |
