Telecom NZ auction ploy prompts "please explain"

date: 16th January 2001, source: reuters.com

New Zealand's Ministry of Economic Development on Tuesday asked Telecom to explain why it bid over itself in the long running auction of radio spectrum.

The Internet-based auction of third generation (3G) and second generation (2G) licences in the 2GHz band resumed last week under new rules aimed at speeding up the process which has been running since last July.

But Telecom surprised other bidders when it topped one of its own bids for a management right to part of the spectrum, the only live bid made during the session.

Recent rule changes mean that one round without bidding would have brought that part of the auction to an end -- Telecom's lone bid effectively kept the sale of management rights alive.

The Ministry's manager of telecommunications policy, David King, said the auction rules did not prevent Telecom's action, but the Ministry had the power to refuse any bid.

"We have written to Telecom asking it to explain why it overbid itself and the Ministry will take its explanation into account when deciding whether to refuse any bid in the future."

Telecom spokeswoman Linda Sanders said her company had replied to the Ministry.

"We've had an indication from them that the explanation is satisfactory."

She declined to detail the explanation or comment on specific tactics but said her company was not trying to prolong the auction.

"We are keen to see the auction come to an end, but also want a satisfactory outcome for ourselves," Sanders said.

Earlier, other bidders expressed annoyance at Telecom's tactics.

The New Zealand Herald reported that auction opponents saw the Telecom move as a way of prolonging the process while it looked for more customers in the mobile market, and forced competitors to wait to be able to claim spectrum.

At the end of Round 408 the total bid for all licences and management rights was NZ$108.30 million, although previously bidding had reached close to NZ$200 million.

Other bidders include TelstraSaturn , British Telecom unit Clear Communications, and Vodafone Mobile NZ Ltd .

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