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Friday, 9 February, 2001, 14:33 GMT
Three apply for Belgian 3G auction
Nokia concept 3G terminal
Doubts about the 3G business model have hit telecoms share prices
Only three telecoms groups have submitted bids to participate in Belgium's planned auction of four 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

The three bidders were the country's existing mobile operators: 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.

Belgian authorities will now take two weeks to review the bids. An auction of the licences is due to start on 7 March.

The Belgian government had said it hoped to raise at least 60bn Belgian francs ($1.37bn; 951m) by selling four licences.

Industry sources said that now looked wildly optimistic.

But auctioning three licences to three bidders might be workable as the licences would be for different bandwidth quality.

Selling three licences would raise at least 450m euros ($415m; 288m) under state-set minimum prices.

It remained unclear on Friday whether Belgium would attempt to stage the auction or allocate the licences for fixed fees.

The future of the planned fourth licence remains unclear.

"All options are open," Telecoms Minister Rik Daems said. 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, 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.

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See also:

07 Feb 01 | Business
Vodafone sets US float timetable
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