Telecom protests at Spanish licence rise

date: 30 October 2000

International telecoms operators are considering suing the Spanish government after it decided to raise the annual fees charged to holders of third-generation mobile phone licences by almost 3,000%. The four consortia that were awarded the licences in March - which included British Telecom, Vodafone, Telecom Italia, Spain's Telefonica and France's Vivendi - have protested to Spanish officials over the move to increases fees to 150m euros from 5m euros. "The new tax is unjust," one telecoms operator was quoted by the Financial Times as saying. "It throws our business plan completely off kilter. It undermines the profitability of our project. It has also undermined our faith in the government." ney they are prepared to pay.

Market value rise

The Science & Technology Ministry, which oversees the telecoms sector, had said it was raising the fee because licence auctions in Germany and the UK earlier this year "proved conclusively that the market value of the radio spectrum had risen substantially". The Spanish government raised 520m euros from allocating the licences. It opted for a "beauty contest" approach in which licences were awarded for fixed fees based on the merit of bidders' technical proposals and business plans. Licence auctions in Germany and the UK later in the year raised 50.5bn euros ($46.1bn) and £22.47bn ($35.4bn) respectively. Even Italy's 3G licence auction - deemed a flop when it ended after only two days bidding with the five-licence total at 12.16bn euros ($10.18bn) - generated 23 times as much revenue as Spain's contest. Telecoms firm sources accused Prime Minister Jose Maria Aznar's government of "goldfever" and noted that the 600m euro windfall would substantially pay for a 800m euro emergency aid package recently earmarked for farmers, fishermen and hauliers.

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