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Thursday, 27 April, 2000, 15:56 GMT 16:56 UK
UK mobile phone auction nets billions
wap mobiles
The internet on the move on the phones of the future
The auction for next-generation mobile phone licences in the UK is over, leaving Chancellor Gordon Brown with a 22.47bn ($35.4bn) windfall.

Result after 150 rounds
Licence A:
TIW 4.3847bn

Licence B:
Vodafone Airtouch 5.964bn

Licence C:
BT 4.03bn

Licence D:
One2One 4.003bn

Licence E:
Orange 4.095bn
The five winners are TIW, a US-Canadian company backed by Hong Kong conglomerate Hutchison Whampoa, and the four companies that currently run mobile phone services in the UK - BT Cellnet, Orange, One2One and Vodafone Airtouch.

The auction was over when cable company NTL, backed by France Telecom, dropped out of the race.

The move had been widely expected after NTL called for a 24-hour time-out in the auction. In a statement the company said that "other strategies" offered better values - a hint that it might try to merge with or take over a rival operator.

Record result

The auction result leaves market leader Vodafone with one of the strongest of the mobile phone licences, while BT Cellnet has to make do with a weaker frequency.


The price ... was too high. It seemed more reasonable to withdraw, in the interest of our shareholders and customers.

NTL owner France Telecom
The best licence, though, had been reserved for a newcomer and was snatched by TIW.

Thirteen bidders had driven up prices well beyond the original estimate of a total auction value of 5bn.

The 22.47bn windfall is equivalent to 400 per person in the UK.

However, no major spending spree is expected. Instead, the government plans to pay off national debt with the proceeds.

The money may not all be forthcoming at once as the licence winners have the option of paying in instalments over the 20-year licence period, with half paid up front.

Orange takeover war

The result will trigger a take-over war for Orange, which was recently bought by Mannesmann of Germany but must now be sold after the German firm was bought by rival Vodafone Airtouch.

There has been speculation that France Telecom may try to buy Orange as an alternative route to taking over a licence, and merge it with its NTL customer base.

Telefonica of Spain is also expected to express an interest.

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 as well as Telefonica.

 WATCH/LISTEN
 ON THIS STORY
Perdita Patterson, Editor What Mobile Magazine
"These are not the mobile phones we are used to today"
The BBC's Rory Cellan-Jones
"The treasury will use the money to reduce the national debt"
The BBC's Evan Davis
"Someone has to pay the bill - who will it be?"
Peter Bamford, Chief Executive of Vodafone UK
"There was a possibility the bidding would reach these levels"

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08 Dec 99 | Science/Nature
26 Apr 00 | Business
11 Oct 99 | Business
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