German mobile auction sets record

date: 5 September 2000

A massive $37 billion windfall created from auctioning Germany's mobile telephone licences, the biggest in Europe, is sparking calls for money to be spent on social needs.

The Green Party leader from Western Berlin, Renate Kuenast, wants some of the cash raised to be spent on hospitals and kindergartens.

"I would like to see the money used for social spending," she said.

But a spokesman for the government, Une-Karsten Heye, is reported as saying no final decision on the precise use of the money will be made until the auction is over. The government wants to use the money to ease its debt of DM 1,531 billion ($715.42 million).

Meanwhile the auction continues and has already broken the previous mobile licences record of $33.75 billion raised in the UK. Bidders need up to three of the 12 blocks of bandwidth being auctioned to secure a licence.

The record sum was reached after round 141 of Germany's auction of 4-6 UMTS (Universal Mobile Telecommunications System) licences, which are now totalling DM 79.576 billion ($36.99 billion).

Competitors are bidding for a total of 12 blocks of bandwidth. To qualify for a licence, an operator will need to win two blocks, but may bid for a maximum package of three blocks.

In each round competitors must submit a minimum bid, which must top the previous rounds bids by a percentage decided on by the regulator. The increment, which stood at 10 percent from the start of the auction, was cut to five percent from Round 139 on Tuesday morning.

Swisscom-backed Debitel became the first competitor to quit the race on Friday, leaving six bidders.

The six include existing German mobile phone operators -- Deutsche Telekom, T-Mobil, Mannesmann Mobilfunk, E-Plus-Hutchison, Viag Interkom and MobilCom.

The other is Group 3G, a consortium linking Finland's Sonera and Spain's Telefonica. Mannesmann Mobilfunk is backed by Vodafone Group. MobilCom is backed by France Telecom and Orange, E-Plus-Hutchison is backed by KPN Telecom, Hutchison Whampoa and NTT and Viag Interkom by British Telecommunications.

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