Australia's 3G auction raises A$1.17 bln

Australia's third generation spectrum auction finished on Thursday after raising just A$1.17 billion, a figure which is likely to put a big dent in Federal government budget forecasts.

The Australian Communications Authority said on its website that the auction closed after round nineteen when there were no further bids on any lots. The final result was only marginally above the A$1.08 billion reserve price.

The Australian government had forecast it would raise A$2.6 billion from total spectrum sales this fiscal year ending June, a crucial pillar of its budget surplus in 2000/01 which was forecast at A$4.3 billion in its mid-year update.

``It doesn't have any medium-term implications but it does mean the surplus for 2000/01 is fast diminishing, when you also factor in the lower employment and economic growth,'' said Grant Fitzner, senior economist, HSBC.

The bulk of the A$2.6 billion from spectrum sales was expected to come from the 3G auction.

The forecast has long been considered optimistic as it was made last May before a global downturn in telco stocks amid concern at capital spending.

3G mobile phone technology is expected to provide high-speed Internet access, data, video and CD-quality music services.

Six bidders in the auction made offers on 48 of the 58 lots available, with Australia's largest telecoms group Telstra Corp the biggest spender.

Telstra made high bids totalling A$302.02 million, Vodafone Pacific bid A$253.55 million, Cable & Wireless Optus A$248.87 million and Hutchison A$196.10 million.

Qualcomm Inc's 3G Investments bid A$159 million and and ArrayCommInc's CKW Wireless A$9.45 million for spectrum.

The successful bidders will be allocated licences with a 15-year term, starting October 2002.

Telstra shares fell seven cents to A$6.45 as the broader market fell steeply. C&W Optus gained eight cents to A$3.98 and Hutchison rose four cents to A$0.96.