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Friday, 2 March, 2001, 17:32 GMT
Belgian auction misses target
Nokia concept 3G terminal
Third generation phones: licences have cost the equivalent of $550 per user
Belgium has become the latest country to report disappointing proceeds from the sale of airwaves for next generation mobile phones.

Belgian telecoms regulator IBPT has revealed that the auction of three licences raised 450.2m euros (286m), one third of original expectations, with one concession left unsold.

The announcement comes towards the end of a worldwide round of spectrum sales that has reaped diminishing returns.

Telecoms firms, laden with debt from earlier purchases, have proved increasingly unwilling to bid up for further licences.

While frontrunners such as Britain and Germany sold licences for the equivalent of more than $550 (373) per user, Switzerland in December gained the equivalent of $17 (11.50).

Denmark is developing a new-style licence auction in an effort to boost takings, reports said, while Hong Kong has devised a royalty-based system.

Unsold licence

IBPT awarded the Belgian licences to the country's three incumbent operators for about 150m euros (95.2m) each, after six other groups pulled out of the auction ahead of an 8 February deadline.

The winning bidders included Proximus, owned by Belgium's national operator Belgacom and UK giant Vodafone, which claimed to have gained the premier licence, with France Telecom's Mobistar and Dutch-based KPN-Orange buying the other concessions.

The IBPT and Belgium's Telecommunications Ministry, which had hoped to raise 60bn Belgian francs (944m) from the sale, have yet to decide what to do with the unsold licence.

"We are considering a variety of scenarios," IBPT managing director Eric Van Heesvelde said.

Sealed bids

Denmark, which is to sell four licences for third generation phones in the autumn, has pinned hopes of high auction takings on a system of sealed bids.

Regulators believe the introduction of greater secrecy will encourage interest from smaller telecoms firms.

"In a sealed bid auction, it is possible for an aggressive new entrant to outbid a conservative incumbent," the country's IT and Research Ministry and National Telecom Agency said in a draft document.

The organisations believe this strategy will also reduce the potential for collusion between bidders, which is widely seen as a factor in the declining auction returns.

A minimum bid price of 2bn Danish crowns (170m) is sufficiently low to give smaller operators a chance, Research and IT Minister Birte Weiss said.

Asian prospects'

Singapore will next week issue guidelines for its own spectrum auction, with four licences on offer.

But analysts said that, with a minimum bid price of 150m Singapore dollars (58.2m), it is unlikely to attract considerable international interest.

"European operators have overpaid in Europe and they can't afford to pay any more here, and a lot are pulling out of Asia," said Kelvin Tay, telecoms analyst at ABN Amro.

Michael Millar, telecoms analyst at SG Securities, said: "All you can say is that it will be a fairly subdued affair."

It is "highly likely" that the licences will be won by Singapore's current three mobile phone operators, he said.

"And whoever wins, could probably get licences quite close to the minimum bid price."

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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