France will not finish auction until late 2002

date: October 24, 2001

France will only complete the sale of its four 3G mobile telephone licences next autumn - over two years after the end of the British and German auctions - according to a sketchy timetable produced on Tuesday by the French telecommunications regulator.

Last week, Laurent Fabius, finance minister, slashed the upfront cost of the high-speed licences - including the two already sold to France Telecom and Vivendi Universal - to E619m ($552m) and extended their life from 15 to 20 years, prompting a surge in share prices across the French telecoms sector.

The licence process has been held up by the finance ministry's failure to reduce the E4.95bn price tag initially fixed for the licences. This led to the failure of a "beauty contest" in January, which saw just two candidates applying for four licences after operators such as Bouygues Telecom withdrew from the process.

Bouygues is now re-considering that decision and is in discussions with NTT Docomo of Japan over possibly using I-mode technology in France should it enter the 3G market. Other operators, including Spain's Telefónica, are also re-examining their options in France.

"The fact that in France we still have two additional licences to award is, without doubt, a better situation than prevails in countries that were quick out of the blocks and now find themselves forced to find ways to allow consolidation," said Jean-Michel Hubert, the telecoms regulator.

Mr Hubert said the government would be in a position to launch the "second round" of the beauty contest in December. Potential candidates are still waiting to hear details of the government's new plan to charge a variable levy on 3G turnover, expected to be 1-2 per cent.

Once the full conditions are published in December, candidates for the two remaining licences will probably have around 4-5 months to review the revised terms and submit their bids. Mr Hubert said the licences would then be awarded "from the beginning of autumn 2002".

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