Spain makes further UMTS concessions
By Joshua Levitt in Madrid
Published: December 26 2002 23:04 | Last Updated: December 26 2002 23:04
The Spanish government on Thursday reached an agreement with the country's four wireless carriers to return some €5bn ($5.2bn) in bank guarantees set aside for investment in UMTS, or third-generation, mobile networks.
The long-awaited decision marks the second reversal by the government in order to ease the financial burden on the sector, beleaguered by delays in the introduction of the new technology across Europe.
Josep Piqué, Science and Technology Minister, said the government would reduce the total guarantees from €7.4bn to €1.3bn, freeing up most of the cash deposited by Telefónica Móviles, Vodafone, Amena and Xfera, when they acquired the licences in March 2000. About €900m of the original total has already been returned to the companies.
The guarantees committed the four companies to a total infrastructure investment of €26bn, but the sector argued that the cash could be put to better use.
Thursday's agreement calls for the start of commercial services before the summer of 2004, contingent on several factors, including the availability of three different wireless terminals on the Spanish market. The government had already delayed the mandatory start date for UMTS service from August 2001 to June 2002. But the only use of the networks to date has been for testing the technology.
Capital spending by the operators has also slowed delays, but Mr Piqué said the four companies, including Xfera, which had completely frozen its project, pledged to raise investment by 20 per cent to €1.4bn in 2003.
Last year, the sector forced the government to backtrack on a €960m tax it levied on the use of the radio spectrum to offset the comparatively modest sums raised in its "beauty contest" for the UMTS licences. Spain earned €520m from the contest, compared with the German and British auctions that raised €50.5bn and £22.5bn, respectively. The tax was subsequently cut back to about €250m.
The agreement comes as the government plans to present new telecommunications and audio-visual legislation next year. Mr Piqué must create a framework to address problems unforeseen in the initial laws governing the two industries, including the effects of a controversial merger to create a near monopoly in pay television.
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