WSJ - Australia's 3G Wireless Auction Draws High Bids of $524.3 Million
March 20, 2001
Tech Center
Australia's 3G Wireless Auction Draws High Bids of $524.3 Million
A WALL STREET JOURNAL News Roundup
SYDNEY, Australia -- The third day of Australia's third-generation wireless-spectrum auction closed Monday with bids totaling 1.07 billion Australian dollars (US$524.3 million). That was slightly below the government's A$1.08 billion reserve price -- the minimum amount to be raised before the government will issue licenses for the scarce spectrum earmarked for services based on new wireless technology.
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3Australian Regulators Have Upper Hand in Vodafone's Optus Proposal (Feb. 12)
Wireless carriers intend to use the spectrum to add data-intensive functions similar to what is available on the Internet to mobile phones. Analysts expect the bidding to continue until at least the end of this week.
The three highest total bids came from Australia's dominant mobile-phone companies, which are vying for one of two licenses that provide national coverage. Market leader Telstra Corp. bid A$213.25 million, while Cable & Wireless Optus Ltd. bid A$241.1 million and Vodafone Group PLC has so far bid A$252.8 million.
Hutchison Telecommunications Ltd., a unit of Hong Kong-based Hutchison Whampoa Ltd., and surprise entry 3G Investments Ltd., a subsidiary of U.S.-based Qualcomm Inc., are also in the running, competing for spectrum that covers Australia's eight major cities. So far, Hutchison has placed bids totaling A$196.1 million and 3G Investments has bids totaling A$159 million. CKW Wireless Pty. Ltd. has bid A$47.95 million.
The Australian government originally predicted it would raise around A$2 billion from the 3G auction, but the forecast -- made last May before a global downturn in sentiment toward wireless stocks -- now looks optimistic, according to analysts, who say bidding by the Qualcomm affiliate is the main source of competitive pressure in an otherwise lightly contested auction.
"Qualcomm needs a country to use as a test bed in which it can prove [CDMA-2000] equipment," Credit Suisse First Boston's Sydney-based research team said in a report. Qualcomm developed CDMA-2000, one of two rival third-generation wireless standards that so far trails in popularity. CSFB said Australia represents an attractively low-cost opportunity for the U.S. company because of the Australian dollar's current weakness against the U.S. dollar.
Successful bidders will be allocated licenses covering a range of geographical areas with 15-year terms, starting October 2002.
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