Deutschland UMTS auction scores USD 46B gain for regulator.
Hi lml,
A while back I wrote that I thought the spectrum auction in England was an anomaly not to be repeated. Well we now have deja vu all over again. The German auction has just been completed and you could run entire national economies on the licensing fees garnered by Die Regulierungsbehörde Fur Telekommunikation und Post (Reg TP). It would appear that I was incorrect in my assumption that the madness of the English licensing pricing would be corrected. To my mind, this auction process, while a temporary boon for government treasuries, has the ominous potential to throw a wrench in the economic/business justification for the buildout of 3G systems in England and Germany.
Here's the news article from TotalTele:
totaltele.com
German 3G auction ends with six winners
By Emily Bourne, Total Telecom 17 August 2000
Germany has licensed six companies or consortia to offer third-generation mobile services, at the end of the world's most expensive 3G auction, which raised DM98.8072
billion (US$45.85 billion). The final stage, auctioning off extra spectrum to the successful bidders, will begin at 8am CET tomorrow.
The winners, each with a minimum 2x10 MHz block of spectrum, are:
*E-Plus Hutchison (Dutch KPN Mobile, Japan's NTT DoCoMo and Hong Kong conglomerate Hutchison)
*Group 3G (Finland's Sonera and Spain's Telefonica)
*Mannesmann Mobilfunk (subsidiary of Vodafone AirTouch)
*Mobilcom Multimedia (Germany's Mobilcom and France Telecom)
*T-Mobil (subsidiary of Deutsche Telekom)
*Viag Interkom (owned by BT, German utility Viag and Norway's Telenor, but effectively 90% owned by BT as of today).
The results came as a surprise after widespread prediction that newcomer Group 3G would be driven out by high prices, and that T-Mobil and Mannesmann would not give up without three blocks of spectrum, or 2x15 MHz. The winners each paid around DM16.4
billion ($7.6 billion), well below the £5.964 billion ($8.98 billion) Vodafone paid for its
premium U.K. license in May. However, the total raised still trumps the U.K. by more than
$10 billion.
The regulator, Reg TP, said details of the final round would be announced at 6:30am
CET tomorrow. Earlier reports said this phase would auction off an additional five blocks
of 5 MHz spectrum.
Ironically, the most consistently aggressive bidder, France Telecom's Mobilcom
Multimedia, ended up with the cheapest license at DM16.37 billion ($7.6 billion), while
T-Mobil paid the most - DM16.517 billion ($7.7 billion). The prices for the 12 spectrum
blocks were in a similar range, partly because, unlike the U.K. auction, they were all the
same size, and partly because the regulator, Klaus-Dieter Scheurle, cut the necessary
increment between bids again today, from 5% to 2%.
"Six players kicking off after paying 100 billion deutsche marks is a bad start," Dietrich
Ulmer, a member of the Viag bidding team, told Bloomberg News. "It will speed the
process of consolidation."
The final results, after 14 days and 173 rounds, were:
1: Viag Interkom: DM8.3104 billion ($3.86 billion)
2: Mobilcom Multimedia: DM8.17 billion ($3.79 billion)
3: Mannesmann Mobilfunk: DM8.33 billion ($3.87 billion)
4: Group 3G: DM8.3046 billion ($3.85 billion)
5: Mobilcom Multimedia: DM8.2 billion ($3.81 billion)
6: Viag Interkom: DM8.2066 billion ($3.81 billion)
7: T-Mobil: DM8.3043 billion ($3.85 billion)
8: E-Plus Hutchison: DM8.2743 billion ($3.84 billion)
9: T-Mobil: DM8.2779 billion ($3.84 billion)
10: E-Plus Hutchison: DM8.1439 billion ($3.78 billion)
11: Mannesmann Mobilfunk: DM8.1438 billion ($3.78 billion)
12: Group 3G: DM8.1414 billion ($3.78 billion)
For more detailed information, please visit the Reg TP auction site at: umts.regtp.de
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
These "winners" have dug themselves an incredible financial hole to try to climb out of, IMHO. The good news for the consumer is that the high cost of the licensing should act as a driver to get these systems up and running ASAP in order to start paying down the mountain of debt (to mix metaphors mercilessly) that these vendors have taken on.
Comments welcomed.
Best, Ray |
