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The BBC's Peter Morgan
"The only certain winner in all this is the government"
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Wednesday, 26 April, 2000, 08:41 GMT 09:41 UK
NTL calls auction time-out
wap mobiles
The internet on the move on the phones of the future
Cable company NTL, which is backed by France Telecom, has called a 24-hour time-out in the auction for licences to operate the next generation of mobile phones in the UK.

The decision means that there will be no further bidding rounds until Thursday morning at the earliest.

With only six bidders remaining in the hunt for the five licences, speculation has centred on which would be the last of the original 13 bidders to drop out.

The resumption of the auction was delayed on Tuesday by a fault on the phones at the Radiocommunications Agency.

The Department of Trade and Industry was examining whether the fault was connected to the introduction of new area dialling codes for millions of UK businesses and homes.

But the auction, in which bids have soared past expectations to total more than 22.3bn, eventually got going with round 146 taking place two hours later than planned.

That was followed swiftly by three more before NTL called the first of its permitted 'recess days', which suspend the auction for 24 hours.

The four existing mobile operators in the UK are each currently leading the running for a licence, with Canadian TIW leading the bidding for the licence reserved for new entrants to the UK market.

There has been speculation that France Telecom may see buying up-for-sale Orange as an alternative route to taking over a licence.

Vodafone battles BT

Before the Easter break much of the attention had focused on the battle between BT and Vodafone Airtouch for Licence B, the most powerful licence which existing UK mobile phone operators are able to bid for.

By the end of bidding before Easter Vodafone was back in front with a bid of 5.96bn for that licence.

BT did not bid against that on Tuesday, instead being top bidder for the cheaper, and less powerful Licence C.

The bidding for the five licences, which offer the prospect of high speed access to the internet via mobile phones, has soared to nearly 22.5bn ($36bn).

That is more than four times higher than most forecasts before the auction started last month.

"With six players in it, it just means that one person is bidding each round. The whole process is slowed down," said Jo Oliver, telecoms analyst at Lehman Brothers.

"It will take time therefore to wheedle out the least convicted player."

Current bidding
Licence A:
TIW 4.38bn

Licence B:
Vodafone Airtouch 5.96bn

Licence C:
BT 4.03bn

Licence D:
One2One 4bn

Licence E:
Orange 4.09bn

Already, the amount being spent on licence B is greater than the amount analysts had expected to be raised in total from all five licences.

In the 149 rounds of bidding so far for the five licences on offer, the 13 companies which started have been whittled down to the final six.

High-profile companies which have fallen by the wayside as the stakes have risen include Spectrum - a consortium including Virgin and Tesco - Irish telecoms group Eircom, Australian company OneTel and Spain's Telefonica.

Canadian telecoms group TIW has for a number of rounds been leading the bidding for Licence A, which is the most powerful licence. Existing UK mobile phone operators are barred from bidding for it.

The government is now set to receive a huge windfall.

Dealers have been considering the prospect of cancelled gilt auctions as the money raised will reduce the need for government borrowing.

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See also:

03 Apr 00 | Business
Mobile auction: Latest News
11 Oct 99 | Economy Reports
The Telecommunications Revolution
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20bn windfall from phone auction
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