Singapore cuts minimum bid for 3G licenses to S$100m
By Jacqueline Wong, Reuters
08 March 2001
Singapore on Thursday set March 26 as the deadline for applications for third generation (3G) telecom licences but cut the minimum bid by one-third to S$100 million ($57 million) to reflect a weaker market.
It also said it was delaying a nationwide rollout of services by one year until December 2004 because of concerns over the delays in 3G network and handset equipment availability.
The Infocomm Development Authority (IDA), in the auction rules released late on Thursday, said eligible bidders would be announced by April 2. The auction itself was delayed from February until April.
"The assessment is that the market value of 3G licences has dropped considerably," Communications and Information Technology Minister Yeo Cheow Tong told parliament earlier.
"IDA will, therefore, lower the reserve price to bring it in line with current international levels," he said.
IDA said in the event the auction did not result in the allocation of the four licences - valid until December 31, 2021 - the remaining spectrum rights would not be sold for the next year.
Third generation mobile spectrums allow fast data and voice transmission on mobile phones and sophisticated services such as downloading streaming video and CD-quality music and video conferencing.
Downgrades hurt telcos
The minister said high 3G licence costs in some of the early European auctions had led to debt downgrades throughout the telecoms industry, which led to many players losing their investment grade ratings.
"This will in turn lead to higher financing costs, and may slow down the rollout of 3G networks and services, an outcome that is not in the consumer's best interest," he said.
Singapore said in October it would offer four 3G licences valid for 20 years and set S$150 million as the reserve price for each one.
On why the government had decided against a system where operators pay a lower upfront fee and annual royalties to lower risk and benefit consumers, Yeo said the pricing of 3G services to consumers was not likely to be influenced much by whether it would be an upfront fee-only system or a mix of both methods.
Yeo said upfront charges actually compel operators to bring the technology to market quickly to recoup costs.
Telecoms analysts said bidding was likely to be subdued after a lukewarm response to several recent European auctions.
Some had expected the government to sweeten the terms or trim the minimum bid to woo players.
Local operators Singapore Telecommunications, MobileOne (M1) and StarHub, as well as Hong Kong's Sunday Communications, have said they would bid for a licence.
M1's shareholders include Keppel Telecommunications & Transportation Ltd, Singapore Press Holdings, Britain's Cable & Wireless and Hong Kong's Pacific Century CyberWorks.
Starhub Pte Ltd is a consortium comprising Singapore Technologies Telemedia, British Telecommunications Plc and Japan's Nippon Telegraph and Telephone Corp. |
