Hutchison pays HK$766m for 3G Austrian licence

date: 06 November 2000

Hutchison Whampoa has won one of the six third-generation (3G) mobile licences in Austria for 114 million euros (HK$766 million). The Vienna 3G auction, which became one of the shortest and least lucrative in Europe with bids totalling just 832 million euros, finished in less than two days last Friday with proceeds of half what the government had hoped for. Hutchison 3G, a wholly owned vehicle of Hutchison Whampoa, secured a licence in the 10th round with the second lowest bid in the auction.

Hutchison and Spain's Telefonica are the only two newcomers in Austria. The Hong Kong-based conglomerate has now won its third licence in Europe after securing licences in Britain and Italy. Niklas Olausson, analyst at Indosuez W I Carr, said the price paid for Austria represented a deep bargain for Hutchison, as the amount per spectrum represented a 69 per cent discount to the Italian auction and an 86 per cent discount to the British auction.

He said Hutchison had committed 11 billion euros to European 3G licences so far this year. Austria, with a population of 8.2 million, had one of the highest rates of mobile phone ownership in the world. Although mobile penetration already exceeds 70 per cent - which limits the scope for growth even with the new technology - analysts said the Austrians had deep pockets and liked hi-tech gadgets. The Vienna auction outcome was just 94 million euros above the minimum bid, confirming predictions that after spending billions of euros on licences in large markets such as Germany and Britain, rival companies did not have the stomach for a big fight over smaller markets.

Austrian regulator Telecom-Control halted the auction in the second round after detecting signs of possible collusion, and halted it for five hours last Friday until it was satisfied there had been no irregularities. "We came to the conclusion that there was no collusion," Eckhard Herrmann, head of Telekom Control said. The Vienna auction had been overshadowed by looming probes into possible collusion in the Dutch and Italian auctions earlier this year. NMa, the Dutch antitrust regulator, raided the offices of Versatel Telecom International and Telfort, a subsidiary of British Telecom, to investigate possible collusion. The five Dutch licences brought a total of 2.7 billion euros, a quarter of the 10 billion euros the government had hoped for.

Italy's Anti-trust Authority opened an investigation into whether the six bidders for five licences colluded to fix the auction outcome. Rome magistrates are conducting their own investigation after Blu, Italy's smallest mobile company, withdrew after only two days of bidding.

top