French Govt elects to pay a huge Multi billion dollar subsidy to its incumbent telecom companies to promote the European version of 3G technology. Euro socailism in action. So what will the Mighty European commission do to stop this. What about WTO rules.
European Phone-Equipment Makers Rise on UMTS Decision (Update1)
By Jad Mouawad
Paris, Oct. 17 (Bloomberg) -- Alcatel SA and other European phone-equipment makers rose for the second day on optimism phone companies will have more money to invest in new networks after the French government cut the price for faster wireless service licenses.
Alcatel, Europe's fourth-largest telecom equipment maker, rose as much as 15 percent, after gaining 8.6 percent yesterday, to 17.2 euros. Ericsson, No. 1 maker of mobile telephone networks, rose as much as 8 percent. Bloomberg's European Phone Equipment index, down 61 percent this year, rose 8.5 percent.
France will charge 619 million euros ($560 million) for each license, plus an unspecified share of revenue from the services, it said yesterday. That's down from the 4.95 billion euros the government sought in June. France also said it would seek to award two more licenses by the end of the year.
``It's good news for the equipment makers who depend on operators' expenditure,'' said Mark Davis, a telecommunications analyst at WestLB Panmure. ``It's the first bit of good news about 3G in a long time.''
The lower cost of the UMTS, or Universal Mobile Telecommunications System, licenses will save France Telecom SA and Vivendi Universal SA -- each awarded a license this year -- about 1.9 billion euros by the end of 2002. That's cash that can go towards reducing debt and building the networks, which analysts estimate will cost about 4 billion euros per operator.
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Orange, the mobile phone unit of France Telecom SA, has placed more than 2.3 billion euros of orders with Nokia Oyj, Alcatel and Ericsson for building networks in France, the U.K. and Germany. Vivendi's SFR mobile unit picked Nokia and Siemens AG to build its UMTS network
Shares of Bouygues SA, which owns France's No. 3 mobile phone company, and Spain's Telefonica SA also rose, as investors bet the companies may seek the two remaining French licenses. Bouygues gained as much as 7.9 percent, after rising 10 percent yesterday. Telefonica rose as much as 5.9 percent. Telefonica Moviles shares rose as much as 4.2 percent.
Germany's Siemens AG rose as much as 6.9 percent, and Nokia Oyj gained as much as 8.1 percent, after gaining 4 percent yesterday. Marconi Plc, the biggest U.K. phone-equipment maker, rose as much as 34 percent to 50 pence. Its shares have more than tripled this month.
European phone companies also rose. France Telecom, owner of the nation's biggest mobile-phone company Orange SA, rose as much as 7.5 percent to 40.07 euros. Shares of Vivendi, which controls SFR, No. 2 wireless company, gained up to 5.3 percent to 56.6 euros. Deutsche Telekom AG shares rose as much as 5.2 percent.
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