French government to hold second 3G round

date: 31st January 2001, source: ft.com

The French government on Wednesday said it would hold a second round of its contest for third generation mobile phone licences, after ART, the telecommunications regulator, received only two bids for the four licences it was offering through a beauty contest.

Laurent Fabius, the French finance minister, said the two bids, from France Telecom, the partly-privatised national operator, and SFR, which is controlled by Vivendi Universal, would be assessed, but there would also be a second round of bidding to bring the number of licence-holders up to four.

The decision follows a call for a second round from ART earlier on Wednesday. The regulator said a new round was needed to "guarantee a competitive environment at the time of the opening of the 3G market".

Jean-Michel Hubert, chairman of ART, said the award of licences to the two bids received would go ahead as planned by June. He stressed that the terms of the second round, which would also be a beauty contest rather than an auction, would have to ensure operators are treated fairly vis-a-vis the companies in the original round.

Mr Hubert would not confirm a date for the second round. "It is not a regulator that will determine the date, it is the market," he said. He did not rule out the possibility that the second round might not be completed before the end of the year.

The French 3G contest ran into earlier this month when potential bidders voiced concerns about the FFr32.5bn (E4.95bn) fee the government planned to charge for each licence.

In the wake of growing nervousness about whether future earnings from 3G technology will justify investments, the price, though lower than that charged for licences in the UK and German auctions last year, was felt to be too high.

Bouygues Telecom, France's third mobile operator, pulled out of the contest on Tuesday, saying it did not want to take "unreasonable financial risks".

The move came a week after Suez Lyonnaise des Eaux and Telefónica abandoned a plan to bid for a licence. Deutsche Telekom, Dutch telecoms operator KPN, and Hutchison Whampoa of Hong Kong had already withdrawn from the contest last year.

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