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Thursday, 27 April, 2000, 09:34 GMT 10:34 UK
The auction: Winners and losers
mobile phone graphic

WINNING BIDS AFTER 150 ROUNDS

Licence A: TIW - 4.384bn
Licence B: Vodafone - 5.964bn
Licence C: BT - 4.030bn
Licence D: One2One - 4.003bn
Licence E: Orange - 4.095bn

Combined value of leading bids: 22.47bn

THE PRIZE

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.

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 auctioned off five licences to create the networks and to operate the enhanced mobile services, and the resulting windfall income for the Treasury has been beyond what must have been the wildest dreams of Chancellor Gordon Brown.

THE DIFFERENT LICENCES

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

Licence B is the most powerful licence that was available to 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 licenses, which take effect in 2002, are good for 20 years.

THE WINNERS

The winners of the ferocious and costly bidding war are the four existing mobile operators:
Vodafone Airtouch, the market leader
BT Cellnet, UK number two
Orange, which is up for sale, and
One2One, owned by Deutsche Telekom

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

THE LOSERS

NTL Mobile is jointly owned by NTL, the cable company and France Telecom and was the last to withdraw from the auction.

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

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.

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

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

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

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

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

HOW THE AUCTION WORKED

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

That total was exceeded after only 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 sign of any bidder dropping out.

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

Increases in bids had to be in multiples of 100,000. The process continued until there were no fresh bids for any of the licences.

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18 Apr 00 | UK
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