Bouygues pulls out of French 3G bid

date: 30th January 2001, source: ft.com

Bouygues , the parent company of French wireless service Bouygues Telecom, said on Tuesday it had decided not to enter a bid for one of the four French 3G licences.

"Bouygues telecom considers that the bid conditions are dissuasive", the group said in a statement.

It said it would now seek to develop a multimedia offer through so-called 2.5G technologies such as GPRS and EDGE.

"With this alternative, Bouygues Telecom will be able to develop offers for the general public more quickly, at competitive and attractive prices", Bouygues said.

Criticisms

Ever since the French government announced the €5 billion per licence price tag, Bouygues has criticised it as too high.

The group, whose original business is building, said last Wednesday the Bouygues Telecom board would meet on January 30 to decide whether to submit a bid or not.

Another potential bidder, a consortium formed by Suez Lyonnaise des Eaux and Spain's Telefonica Moviles, also said last week it was pulling out of the contest because of the high cost.

Bouygues's move, coming after Suez Lyonnaise's decision, effectively halves the €20 billion the windfall the government was expecting.

While it will definitely save Bouygues some cash in the short term, it also threatens its longer-term future as wireless operator.

Investors massively sold the shares, which were halted limit down twice on Tuesday afternoon.

They closed 4.28 percent lower at €52.55.

SFR's cabinets

Of the two only candidates left, Cegetel, the telecom division of France's Vivendi Universal, said it has filed its own bid earlier in the day while France Telecom's Orange prepared to do so on Wednesday morning.

Cegetel said its mobile unit SFR had "officially filed at 10 a.m. its bid for a third-generation UMTS mobile licence with (French telecom watchdog) Autorite de Regulation des Telecommunications".

Cegetel chairman Philippe Germon personally presided over the delivery of 32,000 pages of documents encased in eight mobile phone handset-shaped cabinets, each 3-foot high and weighing about 130 kilos (280 lb).

Germon's presence testified "to the commitment to this bid of the entire firm, and its shareholders", Cegetel said in a statement.

It said 300 employees worked on the bid, including 70 full-time staff for the last several months.

A France Telecom spokesman said Orange's bid would be submitted at 9 a.m. on Wednesday morning, three hours before the noon deadline. The documents will be delivered in eight orange-coloured wheeled boxes, he said.

Less specific than Cegetel, he could not give the total weight, and said "several dozen people had been working on the bid for several months".

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