Singapore Is Seen Canceling 3G Auction After Licenses Outnumber Bidding Field
By H. ASHER BOLANDE
Staff Reporter of THE WALL STREET JOURNAL
Singapore's government is expected to announce Wednesday that it will scrap a planned auction of third-generation wireless licenses after the field of bidders dwindled to just three operators -- one less than the number of licenses up for sale.
Provided that there are no overlapping bids by operators for the four different spectrum lots on offer, each bidder will obtain a license for 100 million Singapore dollars (US$54.9 million), the minimum bid set for the auction, Singapore's telecom regulator, the Infocomm Development Authority, has said.
The number of bidders shrunk unexpectedly after Hong Kong cellular provider Sunday Communications Ltd. -- the only company other than Singapore's three incumbent mobile carriers that was to take part -- withdrew from the running late Monday. The company said it had short-term difficulties making financial arrangements to pay a nonrevocable bond required by the government.
"We simply ran out of time to secure complete project financing, and even though we were close to resolving this issue, without full approval it did not make sense to go forward," said Craig Ehrlich, Sunday's group managing director, in a statement. Yet the cancellation of the auction was already a strong possibility before the company pulled out; analysts said the chance any bids would clash was small with four companies chasing four practically identical licenses.
Now, with three bidders, "it's very unlikely that there will be an auction, and even if there was one, it would be very quickly finished," said Bertrand Bidaud, the Singapore-base d head of regional telecommunications research at Gartner Group Inc.
While in theory it's possible that more than one operator could bid for the same chunk of spectrum, there's no real difference between them, so "they would not pay a premium for it," he said.
Like many countries last year when optimism over the value of 3G licenses was high, Singapore was looking to fetch lucrative bids from several companies for its own auction.
But that happened only in the United Kingdom and Germany, and the tens of billions of dollars operators paid for licenses in those countries eventually led many to question if these new services would be financially viable. In general, interest in licenses has shrunk as a result, and Singapore did not attract as many foreign bidders as it had hoped.
Singapore's second-largest cellular operator, MobileOne (Asia) Ltd., is seeking a 3G license, but the company itself up for sale. Regional Wireless Co., a joint venture between Australia's Telstra Corp. and Pacific Century CyberWorks Ltd. of Hong Kong, has stated it intends to make a bid for MobileOne.
Singapore Telecommunications Ltd. has also expressed interest in purchasing MobileOne, but analysts say the island state's telecom regulator would undoubtedly reject such a deal, which would give the former monopoly control of 90% of the country's mobile-phone market. StarHub Mobile Ltd., which began offering service a year ago, has about 10% of market.
Under published guidelines, any license unallocated in the current auction process will have to be auctioned off by the government a year from now. Sunday Communications has indicated it intends to pursue that opportunity.
Write to H. Asher Bolande at hyam.bolande@awsj.com1
--------------------------------------------------------------------------------
URL for this Article:
interactive.wsj.com
Hyperlinks in this Article:
(1) mailto:hyam.bolande@awsj.com
--------------------------------------------------------------------------------
Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved.
Printing, distribution, and use of this material is governed by your Subscription Agreement and copyright laws.
For information about subscribing, go to wsj.com
Used with permission of wsj.com |
