Sweden awards UMTS licences, snubs Telia

date: 16th December 2000, source: Telecom click

Sweden awarded UMTS third-generation (3G) mobile phone network licences to four consortia on Saturday, but in a surprise decision rejected the application of national telecoms operator Telia.

The Swedish Post and Telecom Authority (PTS) said two of the four licences on offer went to domestic operators Europolitan, controlled by Britain's Vodafone Group Plc and Tele2, the cellular arm of Netcom, in cooperation with Societe Europeene de Communication SA (SEC).

A consortium grouping Orange, the mobile subsidiary of France Telecom, BredbandMobil, a joint venture between Bredbandsbolaget and Internet consultancy Framtidsfabriken, Skanska AB, NTL Ltd and Schibsted ASA also won a licence.

The fourth was given to a consortium called HI3G Access AB made up of Investor AB and Hutchison Whampoa Ltd.

Sweden awarded its UMTS licences based on evaluations of the applicants' financial strength, technical feasibility, roll-out speed and commitment to geographical coverage. Ten groups representing a total of 30 companies applied.

UMTS (Universal Mobile Telecommunications System) networks will give users access to the Internet from their cellular phone. Mobile phone multi-media services are expected to come on stream in the next few years.

Sweden's beauty contest model makes its licences far cheaper than the over 200 billion euros ($177 billion) pledged by operators for 3G-network rights sold at auctions in six European countries this year.

Licence holders are expected to be spending as much again on UMTS infrastructure. The overall costs have lately sparked stock market worries about massive debt loads piled up by carriers keen to get a slice of the cake although the future value of the UMTS services market remains in doubt.

The Swedish licence winners will be charged a nominal fee of 100,000 crowns ($10,310) each plus 0.15 percent of annual turnover, the PTS said earlier. The Swedish government believes the relatively low costs of its licences will speed up the development of UMTS services and reduce customer charges.

BIG-NAME LOSERS

In addition to Telia, which said it would appeal the PTS's decision, international heavyweights such as Deutsche Telekom of Germany and Spain's Telefonica were among unsuccessful applicants for a Swedish licence.

Speaking for one of the winners, Netcom spokesman Fredrik Berglund said Tele2 would start building its UMTS network as soon as possible and expected operations to become profitable after seven or eight years.

``We are very happy and this confirms that we are on the right track,'' Berglund told reporters.

The cost of building the UMTS network infrastructure was likely to be more than 11 billion Swedish crowns ($1.15 billion), he said, adding that the financing had been arranged.

Berglund declined to give further details, saying the bank consortium behind Tele2 might be presented on Monday.

Tele2 sees multimedia services offered in 3-G networks accounting for more than 50 percent of revenues by 2005 or 2006.

TELIA FOUND LACKING

PTS director-general Nils Gunnar Billinger told a news conference the agency had found Telia's application lacking in many respects, among these geographical coverage.

``Telia cannot show that they would provide sufficient coverage in any environment. We feel that their shortcomings are considerable,'' he said, noting Telia would need to increase three-fold the number of base stations it had planned to build.

Signals are transmitted to and from cellular phones via base stations to fixed-cable phone networks.

Analysts had expected Telia to be a sure winner of one of the four licences. Telia's share has fallen 30 percent since it was floated earlier this year. It closed at 59.5 crowns Friday.

``Telia is the leading mobile operator in the Swedish market with full national GSM-coverage...it is very peculiar that PTS doesn't seem to believe we are worthy of a licence,'' Telia Group President and CEO Marianne Nivert said in a statement.

``We will review our application once again, and then make an appeal,'' Senior Executive Vice President Kenneth Karlberg said.

top