Mobile auction: Latest News

WINNING BIDS AFTER ROUND 71

Licence A: One.Tel: £1.313bn

Licence B: Vodafone: £1.3125bn

Licence C: Worldcom: £963.5m

Licence D: 3GUK: £965.1m

Licence E: Orange: £1.0022bn

Combined value of leading bids: £5.5563bn

BACKGROUND

The next generation of mobile phones will make the wireless internet a reality for the UK.

Phones, watches and other handheld devices will be powerful enough to show video on demand.

The experts say that within a couple of years, more people will be connecting to the internet on the move than via a bulky personal computer on a desk at home or work.

The UK Government is currently in the process of auctioning five licences to create the networks and to operate the enhanced mobile services.

HOW THE AUCTION WORKS

The government put a minimum price on each of the licences, which added together made £500m.

That total was exceeded after a couple of bidding rounds. Experts predicted that the firms might be willing to fork out a combined total of as much as £5bn for the lucrative licences, but after 70 rounds the total volume of bids went well above this mark, with no signs of any bidder dropping out.

The highest bidder for each licence has to sit out subsequent rounds until its bid is topped. Each contender is allowed to bid for one licence at a time.

Increases in bids must be in multiples of £100,000. The process - which is open ended - will continue until there are no fresh bids for any of the licences.

THE DIFFERENT LICENCES

The most powerful of the licences, Licence A, is not open to the existing four mobile phone companies in the UK. This is to ensure that a newcomer, without an existing network, can take on the current operators.

Licence B is the most powerful licence available to the firms which already operate mobile phone networks in the UK.

The three others, Licences C, D and E, have less capacity and are roughly of the same level.

THE CONTENDERS

The four existing mobile operators: BT Cellnet, Orange, One2One (owned by Deutsche Telekom) and Vodafone Airtouch

The newcomers

3G(UK) is an Eircom company. Eircom is one of Ireland's leading providers of local, long distance and international telecommunications services.

Crescent Wireless is a recently organised company whose shareholders have significant interests in Global Crossing. The shareholders of Crescent Wireless have granted an option to Global Crossing to purchase up to 100% of Crescent Wireless.

Epsilon is a wholly owned subsidiary of the Japanese finance house Nomura.

NTL Mobile is jointly owned by NTL, the cable company and France Telecom.

One.Tel Global Wireless is a subsidiary of One.Tel, a global telecoms company based in Australia.

Spectrum was formed by the Virgin group and its partners which include Nextel, Sonera, EMI, Tesco and a number of private equity funds.

Telefonica UK is a wholly owned subsidiary of TelefonicaSA, one of the leading telecoms companies in Spain and Latin America.

TIW UMTS (UK) is a subsidiary of TIW, the telecoms company listed in Montreal and Atlanta, which also owns the UK operator Dolphin.

WorldCom Wireless (UK) is wholly owned by MCI Worldcom, the global telecoms company.