Spectrum appeal fading

date: 11th February 2001, source by: ni.com.au

BIDDERS in the Federal Government's third-generation spectrum auction have warned they will keep a tight rein on the purse strings.

Vodafone Pacific, the third-ranked mobile carrier, and Hutchison Telecommunications – a smaller player in the mobile market – have confirmed they have lodged applications.

First and second-placed carriers Telstra and Cable and Wireless Optus as well as Telcom New Zealand are expected to register by today's deadline.

But just how much will constitute a successful bid when the auction process gets under way next month is another matter.

The Government is forecasting the licences for the 2.1GHz band of radio frequency will raise about $2.6 billion.

This appeared to be a conservative estimate early last year, considering the vast sums paid for licences in Europe in 2000.

However, the market has cooled and mobile players are not prepared to as readily commit large amount of funds.

"At Optus, our attitude to the 3G auction is very simple," C&W Optus chief executive Chris Anderson said.

"We've got a clear idea of what 3G can do, we've got a clear idea of what the business cases look like, but we've got an upper limit on what we'll pay for the spectrum," he told a business lunch.

"We don't expect the prices to exceed that limit.

"If they do, we'll walk away and we won't pay for it and an opportunity will be lost."

While Telstra has said it was highly likely to bid for the spectrum licences – in order to deliver high-speed data services – it can do without it.

This was because it would not allow the company to do anything extra, just provide more capacity.

Barry Roberts-Thomson, the managing director of Hutchison Australia, which is 58 per cent owned by Hong Kong's Hutchison Whampoa, said the spectrum would deliver extra network enhancement flexibility.

"We will only acquire additional spectrum at a price consistent with our internal return targets," he said.

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