Slow start to German mobile auction

The seven bidders for the German third-generation mobile phone licences are still locked in early skirmishing at the end of the first three days of bidding.

The companies are being very careful with their shareholders' money and they're only bidding what they have to

German regulator

The total of the highest bids was only £1.6bn (2.6bn euros) - well short of the £20bn expected final sum.

With little incentive for bidders to show their hands at this stage, analysts say it could be several days before a clearer picture emerges in the auction, which is expected to last about three weeks.

The German government has earmarked the proceeds of the auction to repay some 33 billion euros of debt. It says it will issue new debt if the windfall gains fall short of expectations.

Cautious

With the £22.5bn raised in the UK auction fresh in the minds of bidders, they appear determined not to overpay for German licences.

The bidders

Deutsche Telekom

Mobilfunk (Vodafone-Mannesmann)

E-Plus (Hutchinson Whampoa, KPN)

Viag Interkom (BT, E.On, Telenor)

MobilCom (with France Telecom)

Debitel (SwissCom)

Group 3G (Sonera, Telefonica etc)

A spokesman for the German telecoms regulator, which is conducting the auction, said: "The companies are being very careful with their shareholders' money and they're only bidding what they have to."

Third-generation mobile phones will allow customers to access the internet on the move or watch broadcasts at transmission speeds 40-times faster than under the current phone standard.

Twelve blocks of spectrum are on offer in the German auction - bidders need a minimum of two blocks for a licence.

Most analysts expect five licences to be awarded, with the four main operators - Deutsche Telekom's T-Mobil, Vodafone's Mobilfunk, E-Plus and Viag Interkom - taking one each.

Mobilcom, backed by France Telecom, is expected to take the fifth licence.

But so far, all bidders are still in the race.