Bidders line up for Belgian 3G auction

Doubts about the 3G business model have hit telecoms share prices

International telecoms groups are expected to submit bids on Thursday for Belgian third-generation mobile phone licences.

The licence sale comes amid a background of turmoil in the mobile phone industry.

Investor sentiment towards the sector has plummeted in the past year amid growing uncertainty about the business model for 3G services.

France's recent attempt to sell four licences attracted only two bidders, while France Telecom cut the flotation price of its Orange wireless unit at the last minute after the offering attracted a lukewarm response.

Uncertain prospects

Prospective bidders for the Belgian licences have until 1600 GMT to file their applications to participate in an auction of licences due to start on 7 March.

Belgian authorities have said they will take two weeks to review the bids before deciding which groups will be permitted to go forward to the auction.

The Belgian government is hoping to raise at least 60bn Belgian francs ($1.39bn) by selling four licences.

However, industry sources said it was uncertain whether as many as four bidders would emerge.

Without at least five contenders an auction of four licences would be effectively dead.

Belgium's three existing mobile phone operators are all expected to be among the bidders. They are: Proximus, a joint venture of national firm Belgacom and the UK's Vodafone; Mobistar, 51% owned by France Telecom; and KPN Orange, owned by KPN Telecom of the Netherlands.

Spanish-French group drops interest

As has been the case elsewhere in Europe, the approach of the licence sale has prompted merger and acquisition activity among prospective bidders.

KPN on Wednesday said it had bought the 50% of KPN Orange that it did not already own from France Telecom.

The French firm had inherited the stake when it bought Orange from Vodafone last year. It agreed to sell it to satisfy competition concerns.

A partnership of Spain's Telefonica and France's Suez Lyonnaise des Eaux, which was known to be interested in Belgian telecoms, is understood to have dropped its interest in the new licences.

Two weeks ago, the group withdrew from the French auction process, saying the licence prices were too high.

Third-generation services are intended to provide users with greater capabilities including video and much faster internet access from their mobile phones.