Ireland auction may be in two parts

date: April 16, 2002

Ireland, the last European country to issue its first tranche of third-generation mobile licenses on June 26, is likely to see a slow rollout of 3G services due to high infrastructure costs and lackluster interest among international participants.

After more than a year of intense bureaucratic wrangling and delays between government departments over pricing, the licenses will be awarded on the basis of merit, while operators will be required to meet strict coverage criteria.

But with only three bidders lined up for four 3G mobile licenses, Ireland may be forced to hold a second so-called "beauty contest" after the first tranche of 3G licenses are awarded.

Not all bidders are guaranteed success. So with one or more licenses left on the shelf, another auction would be the "logical conclusion," according to a source close to the Office of the Director for Telecommunications.

However, some analysts say there should be more incentives for investors and question whether such a small marketplace could sustain more than three 3G mobile licenses, indicating that a second auction is likely to fail.

On offer by June 26 is one 20-year A license for EUR51 million; it must be rolled out to reach 53% of the population by end-2005 and 80% by end-2007.

The A license is cheaper mainly because it features more aggressive, extensive roll-out requirements with higher demographic coverage meaning higher costs for operators.

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